Deloitte Access Economics September quarter 2017

Unless stated otherwise, the following provides a summary of Deloitte Access Economics' (DAE) forecasts published in its Business Outlook September quarter 2017 report.

Economic growth

2016-17

DAE estimates the Territory economy to grow by 1.3 per cent in 2016-17 (Chart 1). Growth is expected to be underpinned by private consumption, and private engineering and commercial investment, for which the latest state final demand data for 2016-17 showed strong growth. DAE have also estimated a decline in imports. This is expected to be partly offset by the decrease in private housing investment, private equipment investment, in line with state final demand data, and an estimated decrease in exports (Chart 2).

The Territory is expected to have the third lowest economic growth of all jurisdictions in 2016-17, which range from 0.5 per cent in Western Australia to 4.0 per cent in the Australian Capital Territory. Nationally, the economy is expected to grow by 2.0 per cent in 2016‑17.

Outlook

DAE forecasts the Territory economy to grow by an average of 3.1 per cent per annum over the five years to 2020-21. This is the second highest economic growth forecast of all jurisdictions, equal with Queensland. In other jurisdictions, the estimated five year average economic growth ranges from 1.9 per cent per annum in South Australia to 3.2 per cent per annum in Victoria. DAE forecasts the national economy to grow by an average annual rate of 2.8 per cent over the period 2016-17 to 2020-21.

DAE notes that despite the outlook for future major project activity to be subdued, exports are expected to be a key driver of Territory economic growth, as the Ichthys liquefied natural gas (LNG) project transitions to the production and export phase (Chart 3).

Territory economic growth over the five years to 2020‑21 is expected to be supported by:

• international goods exports, which are forecast to strengthen to an average growth rate of 13.2 per cent;
• private equipment investment, at an average growth of 7.5 per cent; and
• private consumption, with an average growth rate of 2.1 per cent per annum over the period, however remains below the long term average growth.

Labour market

DAE forecasts Territory employment to be flat in 2017‑18 (Chart 4).

In the five years to 2020-21, employment in the Territory is forecast to grow on average by 1.4 per cent, representing the third strongest growth of all jurisdictions (equal with New South Wales), which range between 0.7 per cent in Tasmania to 2.1 per cent in Victoria. The national annual employment growth is forecast to average 1.5 per cent over the same period.

The Territory’s unemployment rate is forecast to average 3.3 per cent over the five years to 2020-21, compared to 5.5 per cent nationally. In other jurisdictions, the average annual unemployment rate forecast over the next five years range from 4.2 per cent in the Australian Capital Territory to 6.1 per cent in South Australia.

Population

DAE expects the Territory population will grow by 0.3 per cent in 2016-17, then strengthen to 0.8 per cent in 2017-18.

Over the next five years, DAE is forecasting the Territory's population to grow by an average rate of 1.1 per cent per annum, compared to an average of 1.5 per cent per annum nationally (Chart 5).

The five year average annual population growth forecast for the Territory is the third lowest of the jurisdictions. In the other jurisdictions, average annual population growth expectations over the five years to 2020-21 range between 0.4 per cent in Tasmania and 2.0 per cent in Victoria.

Consumer Price Index (CPI)

DAE expects the Darwin CPI to grow by 0.9 per cent in 2017-18 (Chart 6).

Over the five years to 2020-21, DAE expects growth to average 1.5 per cent. The five year average CPI growth forecast for the Territory is the lowest of the jurisdictions. Nationally, the average annual increase for CPI over the same period is 2.1 per cent.

Table 1: Deloitte Access Economics Business Outlook forecasts

Table 2: Deloitte Access Economics Business Outlook forecasts by jurisdiction

Table 3: Deloitte Access Economics Business Outlook forecasts by jurisdiction, rank