Mining states expected to see strongest growth rates over coming years: ANZ Research
The housing market, in at least Sydney, Melbourne and Darwin, has seen growth recently, and it's causing a knock-on effect, according to the ANZ Research team, with developer confidence now picking up.
However, they also said that it would be the mining states that record the most pronounced growth rate for gross state product in the coming years.
All non-mining states saw growth rates strengthen in the second half of 2013.
Cherelle Murphy, Dyslan Eades, Tony Morris and Zoe McHugh, from ANZ Research, recently provided a market analysis that pointed to five factors lifting the growth rates and outlooks in all states and territories.
THE FIVE FACTORS
- Improved global economic conditions
- Low interest rates
- The lower Australian dollar
- Better business confidence
- Better consumer confidence
"The mining states, which are on the cusp of an export expansion, will continue to record the strongest growth rates over the coming years in our view. But the non-mining states are expected to improve most compared to the growth rates recorded over the past few years," they recorded.
Interestingly, they also noted that the convergence in growth rates between the states is as expected.
"The mining states are coming off very strong economic performances as the resources construction pipeline dries up, while the non-mining states are steadily firming."
MINING STATES
Queensland: Major LNG projects still under construction, recording high activity levels.
Western Australia: More advanced through resources contruction work, seeing a more rapid slowdown.
Northern Territory: The exception, seeing a boost from INPEX Ichthys LNG Project.
NON-MINING STATES
New South Wales: The best performer, with trend unemployment falling to 10 month low (5.5%) in March. Business conditions have picked up.
Victoria, Tasmania: Sluggish but recently improving outlooks. More exposed to manufacturing, which continues to shrink. Business conditions have picked up.
South Australia: Sluggish but recently improving outlooks. More exposed to manufacturing, which continues to shrink.
Australian Capital Territory: Sturdy, but "will shortly bear the brunt of the not yet wholly known Commonwealth fiscal tightening."
All states, they noted, saw a sharp pick-up in housing market activity "related in part to the expansionary setting of monetary policy," they noted.
FIVE FACTORS LIFTING GROWTH RATES
IMPROVED GLOBAL ECONOMIC CONDITIONS
LOW INTEREST RATES
THE LOWER AUSTRALIAN DOLLAR
BETTER BUSINESS CONFIDENCE
BETTER CONSUMER CONFIDENCE
"Prices have bounced off their lows and have risen especially sharply in Sydney, Melbourne, and Darwin. This has translated to an improvement in developer confidence, with residential building approvals rising strongly, implying dwelling investment is likely to contribute solidly to growth going forward," they said.
Among all the non-mining dominated states and territories, the non-mining business investment is not forecasted to see any notable improvement until next year.