Terry Rawnsley, SGS National Leader of Economic & Social Analysis, unveiled findings from the SGS Economic Performance of Australia's Cities and Regions report at a recent Committee for Sydney event. The report shows that Sydney remains a core driver of Australia’s economic success but there are concerning economic trends to watch.
Sydney’s Gross Domestic Product (GDP) growth slowed in 2017-18 to 3.1 per cent, following three years of very high growth. Despite slower economic growth, Sydney contributed 26.3 per cent of all GDP growth in 2017-18. Almost 40 per cent of Sydney's economic growth was along the global economic corridor from the Sydney CBD to Macquarie Park. GDP growth rates increased in Melbourne, Brisbane, Perth, Adelaide and Canberra compared to the previous year.
Uncertainty in financial and insurance services following the Royal Commission and lower credit growth will see reduced bonuses and lower employment growth in the industry. This will have a flow on effect to the rest of the economy.
The falling housing market will see the pipeline of new housing construction starting to slow, which will impact on State Government revenue via lower stamp duty. There will also be a challenge to find workers to fill new jobs. Labour force participation is at a record high and the unemployment rate is near record lows. Future employment growth will be heavily dependent on migration - although Sydney’s population growth looks to have peaked in 2016-17. Sydney’s housing affordability is still an issue in attracting labour to the city.
Sydney has many strengths including a productive economy dominated by knowledge-intensive industries and a skilled and nimble workforce.
A solid pipeline of infrastructure projects is planned in Sydney including various metro lines, road projects, light rail, and early works for Western Sydney Airport. Housing construction is also strong with around 80,000 dwellings currently under construction – the highest on record.