Australia is getting ready for a widespread economic slowdown in the coming financial year, with COVID-19’s rebound now a thing of the past. Across all states, reduced consumption is expected as the effects of rate rises linger, causing economic growth to dip below trend levels. The rebound has supported very strong employment growth, and labour markets remain historically tight across the country, driving wage growth to over 4% in Western Australia and Tasmania and over 3.5% elsewhere. States have had varied budget outcomes, with COVID-19 leaving New South Wales and Victoria grappling with deficits, while elevated commodity prices buoyed Western Australia and Queensland’s revenues. Temporary cost-of-living relief spending has been a common thread.
Queensland
- Despite consumption deceleration, growth persists due to population, mining investment, and public infrastructure spending.
New South Wales
- Economic growth slowed since late 2022, though a Q1 rebound in business investment and consumption was observed. Labour markets remain robust, with unemployment below 3%.
Victoria
- Consumption slowdown continues due to rate hikes and inflation’s impact on households. Household consumer growth was 0.3% in Q1, and further softening is expected in H2 2023.
Western Australia
- Strong performance driven by the public sector benefits from iron ore exports, though consumption grew modestly. WA’s state budget showed an operating surplus increase.
South Australia
- Economic growth decelerates and is projected to face further pressure in the near term. The state’s budget anticipates a return to surplus in 2023–24, despite ongoing deficits.
Tasmania
- The economy has remained resilient, though slowed consumption and normalising business investment are projected as potential challenges.
If you want to know what this means for your business, contact the Walker Hill team today! support@walkerhill.com.au.
