End of mining boom sees rise of NSW & Victoria as leaders of new two-speed Australian economy

Even if the mining boom – which has given Australia 25 years of uninterrupted growth – has ended, it does not necessarily mean that the economy would contract in 2016. However, growth is no longer led by the mining states but by New South Wales and Victoria.

In its State of the States reports, CommSec says it is Australia’s south-eastern states which are repowering the economy, rebalancing away from Western Australia and Queensland that once powered the country’s two-speed economy. Growth in Victoria and NSW is driven by housing growth and population.

CommSec’s survey states that NSW’s economy is running 13.5 percent higher than its average level the past decade. Victoria’s is 12.4 percent, followed by the Australian Capital Territory at 11 percent, reports The Sydney Morning Herald.

Craig James, chief economist of CommSec, explains that the population boom in NSW and Victoria were because people were drawn by the economic performance of the two states, which in turn creates a momentum for the economy. James sees their economic activities remaining robust into 2017.

With the end of the mining boom, Western Australia slumped into the seventh place, with Tasmania the only Australia state performing below WA, reports ACT. In 2014, WA was in number one spot, but in April it has slipped to sixth place now occupied by Queensland.

In making the rankings, CommSec included economic growth, retail spending, equipment investment, unemployment, construction, population growth and housing starts.

James says the Reserve Bank of Australia would want to see more business spending, “but business is still concerned by the global softness, by Brexit, and the federal elections.” Once these hurdles are cleared, James sees the US presidential elections as the only one left. “Therefore, consumer and business have few reasons for caution,” he adds.

VIDEO: State of the States 25 July 2016

Source: http://www.commsec.com.au