Insights

GDP report: Economic Performance of Australia's Cities and Regions

Posted December 16, 2019

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Australia's regions languish while Melbourne, Hobart and Adelaide boom finds new report.

For almost a decade, SGS Economics and Planning has published Economic Performance of Australia’s Cities and Regions to fill a void in economic policy research. The report shows estimates of Gross Domestic Product (GDP) for each major city and region in Australia. Report author SGS Principal & Partner Terry Rawnsley said Australia's patchwork economy became more apparent during 2018-19.

The patchwork economy we have seen over the past decade has become ever more disparate during 2018-19. The drought has affected many rural economies across Australia while the perennial underperforming economies of Adelaide and Tasmania are booming. Melbourne has reached its highest GDP growth rate on record, yet Sydney’s economy continues to slow. I’ve never seen growth rates like this.

— Principal & Partner Terry Rawnsley
SGS Economics and Planning Terry GDP

Highlights from the report

New South Wales

Sydney’s GDP growth slowed to 2.6 per cent – the lowest rate of growth since 2012-13 – but Sydney remains an important contributor to the Australian economy said Mr Rawnsley: “While growth in the Sydney economy weakened, the harbour city still contributed 32.9 per cent of Australian GDP growth in 2018-19.

Despite growth slowing in Sydney, Sydney’s GDP per capita is now $31,300 higher than Regional New South Wales – the highest gap between the two regions on record.

Regional New South Wales GDP growth was minus 0.3 per cent as a result of the ongoing drought. Since 2016-17, the impact of the drought saw agricultural production fall by almost 20 per cent. The regional cities of Wagga Wagga (-2.5 per cent) and Orange (-1.1 per cent) were also impacted by drought conditions. The regional cities of Newcastle (0.9 per cent) and Wollongong (0.7 per cent) saw minimal growth during 2018-19.

Victoria

Melbourne’s GDP growth was 4.0 per cent. Melbourne contributed 39.8 per cent to national GDP growth in 2018-19, which was the largest contribution of all regions across Australia and the highest on record for Melbourne.

“While Sydney has slowed, Melbourne’s GDP remained strong during 2018-19. Even with the closure of the car manufacturing sector, the growth over the past four years in Melbourne GDP has been the strongest we have seen for 15-20 years. There was broad-based growth across Melbourne with health care and professional services the largest contributors,” said Mr Rawnsley.

In Regional Victoria, it’s a different story. In 2018-19, Regional Victoria’s GDP declined 1.4 per cent. Agriculture had the largest impact on Regional Victoria GDP growth, subtracted 2.0 per cent from GDP. Since 2015-16 the impact of the drought has seen agricultural production fall by over 25 per cent. The fall in transport (-0.6 percentage points) is related to less agricultural products requiring transportation. The health care industry had the largest positive impact on Regional Victoria’s economy, adding 1.0 percentage points to GDP.

South Australia

After being the perennial underperformer economically, Adelaide has experienced a boom over the past three years. In 2018-19 Adelaide grew by 3.2 per cent – significantly higher than the national growth rate of 1.9 per cent. The health care industry made the largest contribution to GDP growth with 1.2 percentage points followed by construction (0.5 percentage points) and public administration (0.4 percentage points).

Western Australia

In 2018-19 Perth’s GDP grew by 0.1 per cent. This low growth and Perth’s sizeable recession in 2016-17 means there has been almost no growth in the Perth economy of over the past five years. Regional Western Australia’s GDP growth slowed in 2018-19 to 2.1 per cent which is well below the levels seen at the height of the mining construction boom.

Queensland

After several years of trending upwards, Brisbane’s GDP growth slowed in 2018-19 to 2.6 per cent. Brisbane’s GDP was $177 billion which represents 9.3 per cent of national GDP.

Regional Queensland saw GDP growth of 0.1 per cent in 2018-19. This was the lowest growth since 2014-15. Mining (1.0 percentage points) and health care (0.6 percentage points) made significant positive contributions to GDP growth. However, drought conditions in parts of Regional Queensland saw agricultural subtract 0.7 percentage points from GDP growth. The end of the construction of several large-scale mining projects contributed to a large fall in construction (0.7 percentage points).

The Gold Coast and Sunshine Coast appear to be suffering from the impacts of the property downturn over the past two years. The construction, real estate services and financial and insurance industries fell during 2018-19. Toowoomba was impacted by lower agricultural production and the flow-on impact for the local economy.

Tasmania

Tasmania’s GDP of 3.6 per cent was the strongest growth since 2003-04. There was a broad base growth profile across a range of industries. In 2018-19, health care (0.9 percentage points) and construction (0.6 percentage points) were the two most significant contributors to Tasmania’s GDP growth.

“Historically, Tasmania’s economy hasn’t kept up with the national average – but in the past two years, Tasmania’s GDP growth has boomed. Our analysis shows that every industry contributed to Tasmania’s economic growth, which is great news,” said Mr Rawnsley.

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Download the 2018-19 report

SGS Economics and Planning GDP 2019