The combined might of a population boom, tourism and record global demand for coal and gas has placed Queensland as the top performer in CommSec’s State of the States report for the first time ever.
Queensland, which has been an ‘also-ran’ in the quarterly series since it was first introduced more than 13 years ago, has beaten Tasmania for the top spot in January with CommSec chief economist Craig James noting that the state’s diversified economy – usually a drag on performance – has been a key strength for the state.
“The diversification of its economy has traditionally prevented Queensland from taking top spot in the economic rankings,” says James.
“That is, strength in some sections of the economy had been offset by weaknesses in others. But Queensland is currently supported by solid mining, energy and tourism sectors as well as solid internal migration.
“Queensland has a strong report card, ranking first on relative population growth and relative unemployment, and is second ranked on three of the other eight economic indicators.”
The State of the States report provides an economic snapshot of each state by comparing annual growth rates for eight indicators, including economic growth, retail spending, equipment investment, unemployment, population growth, housing finance and dwelling commencements.
Queensland surged in the rankings in the previous quarter, sitting at second spot behind Tasmania, after never making it past third spot since CommSec introduced the series in 2009 at the height of the GFC. Tasmania has been a strong performer in the series over the past two years, buoyed by population growth that helped the state largely hold top spot over this period.
In the latest quarter, South Australia has jumped from fifth to third, while NSW and Victoria jointly occupy fourth sport, ahead of the ACT, Western Australia and the Northern Territory.
The report notes that Queensland’s economic activity has benefitted from ‘strong relative and absolute population growth, a strong job market and buoyant overseas demand for energy resources, such as coal and natural gas’.
“When looking at annual growth rates to get a guide on economic momentum, Queensland had annual rates that exceeded the national average on five of the eight indicators,” says James.
“In terms of future economic performance for all state and territory economies, much will depend on the performance of housing and job markets at a time of higher interest rates.”
The report cites construction work done as a key weakness for Queensland in the latest series, although relative population growth is the economy’s strength.
Retail spending has been Tasmania’s key weakness. However, this has been Victoria’s strength, with the state ranked first in the series, despite relative population growth being its biggest weakness.
Victoria has now slipped from top position in July last year, a position it held for one quarter after toppling Tasmania for the first time in nine quarters.
Even though they are lower on the list, Western Australian and Northern Territory are noted for the strength in relative economic growth. WA tops the list for economic growth, but this category remains a key weakness for South Australia.
Strength in NSW is found in equipment investment, although the state is still ranked third in this category which is led by Tasmania. Housing finance is identified as the key weakness for NSW in the latest quarter.
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