Stateometer: forecast downgrades worst for south east

As a result, ANZ Research reviewed its individual state economic forecasts with substantial downward revisions for gross state product growth in 2019-20, especially in New South Wales, Victoria and South Australia.

"ANZ Research has updated its individual state economic forecasts, with substantial downward revisions… in New South Wales, Victoria and South Australia.”

The east-coast economies are likely to feel the greatest impact. They are more exposed to the hiatus in tourism and international student arrivals. However much of the weather-related downturn is expected to reverse with the recovery work.

Signs were already bad in the lead up to the Australian summer. In the three months to December, the latest ANZ Stateometer shows deterioration in labour markets pulled on growth in NSW, Queensland, Western Australia and SA. Not even improved housing conditions were enough of an offset, leading growth in nearly 60 per cent of the Australian economy to slow.

All states and territories, bar the Australian Capital Territory, grew at a below trend rate.

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Ahead

ANZ Research expects conditions to deteriorate in the March quarter. The full economic impact of the coronavirus is less certain but some sort of recovery is likely, particularly in the latter part of 2020. Therefore changes to ANZ Research’s forecasts in 2020-21 are subtle.

All states and territories are expected to have a stronger year than in 2019-20. In Western Australia a steady rate of growth is expected.

Overall, ANZ Research expects NSW’s GSP will slow to 1.25 per cent in 2019-20 before rising to 2.5 per cent in 2020-21. That follows 1.9 per cent growth in 2018-19.

In Victoria, GSP growth is expected to fall from 3.0 per cent in 2018-19 to just 1.75 per cent in 2019-20 and 2.25 per cent in 2020-21.

SA’s GSP is forecast to grow at a rate of 1.0 per cent in 2019-20, down from 1.4 per cent in 2018-19, before recovering to 2.0 per cent in 2020-21.

Cherelle Murphy is a Senior Economist at ANZ