QLD economy slowed sharply in 2018/19

Posted on November 15, 2019 by Pete Faulkner - GDP, QLD, State Accounts, Uncategorized

Earlier this week saw the release by Queensland Treasury of the State Accounts for the second quarter of 2019. As we noted last quarter, this data gets precious little coverage and yet is, in our opinion, a very useful indicator of how the State economy has been performing. While the ABS produce Gross State Product (GSP) data only on an annual (original, unadjusted) basis at the June quarter , the QLD Treasury produce quarterly Trend estimates (albeit rather delayed). We have previously seen some disparity in these two measures, although past experience, and the chart below, would suggest that these differences often get revised away on subsequent releases.

Today we got the release of the annual, original state data from the ABS.

The Treasury Trend data shows Gross State Product lifted 0.8% q/q in the second quarter, although this translates to just a 2.6% annual growth which is well down from the 3.1% rate in Q1 or the 3.4% of a year earlier. The original, unadjusted ABS Gross State Product data suggests a much slower pace of growth at just 1.4% which can be explained, at least in part, by the fact that the ABS data showed a far stronger year in 2017/18 than the Treasury Trend estimates. Whichever way we look at it, it is clear that the Queensland economy slowed in the previous financial year.

The original ABS data shows nation-wide growth at 1.9% (the Trend series was up 2.0%) with Victoria (+3.0%), ACT (+3.0%) and Tasmania (+3.6%) the star performers. NSW was up 1.9%, while SA matched QLD at just 1.4%. WA (+1.0%) and NT (-1.5%) brought up the rear of the pack.

Gross State Expenditure-GSE-(which ignores the external account) was up just 0.1% on a quarterly basis for a 1.1% annual increase (ABS estimates of State Final Demand were +0.3% q/q and +1.3% annual). The main drag on growth was a slowing of private investment (which subtracted 1.7 ppts from GSP grwoth) and fell 5.2% over the course of the year. Offsetting some of this weakness was Public Investment which increased 6.4% annual; however, Public Investment is only a little over 1/3 of the size of Private Investment.

Once we add the external account we see net exports added to Gross State Product growth to bring the rate to 2.6% annual.