New research released today by SGS Economics & Planning (SGS) reveals that Sydney and Melbourne are driving the national economy, while Perth is in recession. During 2016-17, 68.8 per cent of national Australian Gross Domestic Product (GDP) growth was generated in Sydney and Melbourne – the highest level on record. The economic performance of the regions improved greatly during the last year.
Sydney’s GDP growth slowed from a very high 3.9 per cent in 2015-16, to 3.3 per cent in 2016-17. The Professional Services and Financial & Insurance Services industries contributed 44 per cent of Sydney’s GDP growth. At $81,300, Sydney’s GDP per capita is $11,900 higher than the national average – the highest margin since 2004-05 and $30,200 higher than Regional NSW.
After weak GDP growth over 2013-14 and 2014-15 in Regional New South Wales, the last two years have seen stronger growth in GDP of 3.6 per cent (2015-16) and 1.5 per cent (2016-17).
Melbourne contributed 27.1 per cent of all Australian
GDP growth in 2016-17. This 2.8 per cent increase was impacted heavily by the closure of car production lines, which had
a large impact on the economy (a 0.6 percentage point detraction). Manufacturing’s share
of Melbourne’s economy is at a record low of 6.3 per cent. After years of being
the largest industry, Manufacturing
is now Melbourne’s fifth largest industry.
Professional Services (0.7 percentage points) was the largest contributor to Melbourne’s GDP growth. A range of other industries including Health care, Public Administration, Wholesale and Construction contributed between 0.3 and 0.4 percentage points to growth.
Regional Victoria saw very strong growth of 5.8 per cent during 2016-17, the highest growth rate since 1999-2000. Almost 40 per cent of this growth came from very strong agricultural production and a boost in associated food manufacturing. Manufacturing in Regional Victoria saw an increase in production in 2016-17, even with the closure of the Ford plant in Geelong.
Perth was in a recession during 2016-17 with a decline in GDP of 3.5 per cent. This is a significantly larger than the 1.5 per cent decline that Perth experienced during the last national recession in 1990-91.
In 2016-17, Regional Western Australia GDP also decreased with the region experiencing the largest (1.4 per cent) recession on record. This was due to the end of the mining construction boom. Despite strong increases in Agriculture (1.2 percentage points) and Mining (0.9 percentage points), the impact of the decline in Construction (4.8 percentage points) resulted in Regional Western Australia’s economy contracting. The Construction industry in Regional Western Australia is back at levels not seen since before the start of the mining boom in 2003-04.
While not as bad as Regional Western Australia, Regional Queensland also saw a decline related to the end of the mining construction boom. While Mining (3.0 percentage points) production increased strongly in 2016-17, the overall economy remains weak in Regional Queensland.
Brisbane’s GDP growth rate was 1.4 per cent
in 2016-17. Brisbane’s GDP per capita fell (-0.6 per cent) in 2016-17, which
was the fifth time in the last ten years that GDP per capita has contracted. The Brisbane economy was impacted by a decline in
a number of industries, including Mining (-0.3 percentage points) due to reduced
‘head office’ activity, Construction and Manufacturing (both -0.2 percentage