Friday, 05 August 2011
The Commonwealth Bank's State of the States report has found Western Australia has the best economy in the country.
The quarterly report shows Western Australia has taken over from the ACT as the nation's leading economy, based on eight key indicators including economic growth, retail spending and unemployment.
The results reveal WA is benefiting from strength in mining and engineering, as well as strong retail spending and commercial construction.
Meanwhile, the ACT is being boosted by strong housing and commercial construction, along with high population growth.
However, Commsec chief economist Craig James says rising unemployment could pose a threat to the territory's economic strength.
"It has been creeping up just in the last 3 or 4 months, and if there's less people finding work that means less strength in terms of retail activity, perhaps less housing being created," he warned.
"So there's some risks ahead for the ACT economy, and you could see some of the smaller states like South Australia, the Northern Territory and Tasmania creep their way up the leader board."
At the other end of the spectrum, the report identified New South Wales and Queensland as the two weakest economies.
NSW's economic performance is being restrained by a soft job market, along with a weak construction sector stemming from softness in new home building and commercial activity.
Moving north, Queensland's economy is still in the early stages of recovery following devastating floods and a cyclone this year, and has also been affected by a weak housing market.
Craig James says the state's economic woes began during the 2008 global financial crisis.
"A lot of the mining projects were mothballed. Then you have the Aussie dollar soaring, and that put a lot of weakness in the tourism sectors, you've got unemployment rates up about 9 per cent," he explained.
"So there are a number of difficulties for Queensland, but the outlook is looking pretty good. When you've got rebuilding-type activity after the floods, that should kick-start the Queensland economy over the second half of the year."
The report predicts Queensland should benefit from rebuilding activity in the wake of the natural disasters, while NSW will benefit from strong population growth.
The report warned consumer caution, as well as uncertainty due to the Government's proposed carbon and mining taxes, will provide challenges for all states and territories in the future.
Article source: http://www.abc.net.au/news/2011-07-18/state-of-states-report/2798298 18 July, 2011