SOUTH Australia is poised to become the nation’s fastest-growing economy this financial year, as it racks up its best growth since before the global financial crisis, according to a report to be released today.
“South Australia continues to sprint ... so much so that it may wrest the title of ‘fastest growth in the nation’ this year from the ACT,” the Deloitte Access Economics’ Outlook for March states.
“The news will come as a surprise to many but exchange rate fluctuations (weak Aussie dollar) and low interest rates have helped bring in some strength to the underlying statistics that reveal this growth,” Deloitte Access Economics partner Chris Richardson told The Advertiser.
“Export growth has been strong and retail spending has been nudging above the national average for some time now.”
Mr Richardson cautioned about the possibility these “positives” had peaked and may “trickle away” in 2019, leaving SA with its ongoing challenges in energy and manufacturing.
The loss of a federal seat (and political mileage), interstate and overseas migration of youth, demographic pressures and slow population growth were other issues that would need to be addressed.
Positive drivers of change included the higher levels of business investment.
Small business confidence was filtering through to jobs, where employment growth has continued to improve.
The unemployment rate for March came in at 5.6 per cent, seasonally adjusted, down from the 6.3 per cent in February. International visitor numbers rose 6 per cent over the last year, reaching the highest level yet.
“To add more bang for its buck, international visitor spending broke records, too.
“Domestic visitors are choosing Adelaide and its surrounds as well, with over six million overnight trips,“ Mr Richardson said.
Strong inflows of foreign university students boosted education revenue.
The “catch-up investment” in response to making energy reliable and cheap has been rapid,” Mr Richardson said.
“There’s an array of gas, renewable and battery storage projects, with recent projects including the $650 million Aurora Solar Energy Project and the $1.5 billion Ceres wind farm on the Yorke Peninsula.”
All up, there are more than $4 billion worth of projects under way in South Australia, plus a further $4 billion across the various planning stages, the report states, listing the $610 million redevelopment of Adelaide Festival Plaza, the $350 million redevelopment of Westfield Marion, the $300 million Calvary Adelaide Hospital and planned $528 million Women’s and Children’s Hospital in Adelaide.
Construction activity has largely been supported by hefty government spending on roads and railways, but private activity has also seen a jump.
Overall, SA’s relative economic decline is forecast to continue as its share of population and output falls over the medium to longer term.
“Some of the big challenges don’t look to be disappearing any time soon: People (particularly younger people) keep leaving, which is further exacerbating the demographic challenges this state faces as the number of retirees lifts relative to the working age population.”
On a national level, global growth Asian reforms and US tax cuts were likely to help Australia despite the talk of trade tariff wars.
“Australia’s outlook remains good, but seems likely to fall shy of being great,” the report stated.