Quarterly states and territories chart pack: Weaker than expected growth across states

December quarter states and territories chart pack: November 2024

In brief

• The Australian economy grew by 1.4 per cent in FY24, with Gross State Product (GSP) rising in all states. However, apart from the Australian Capital Territory (ACT), all states experienced weaker growth than expected by state budget forecasts.
• The Northern Territory and ACT were the fastest growing economies in Australia, while Western Australia was the slowest.
• The health care and social assistance industry supported all state economies. Another key contributor to growth was the transport and logistics industry, which grew strongly as domestic and international air travel continued to recover following the pandemic.
• According to state budgets, all states are expected to see a recovery in growth in FY25 compared to FY24. The territories are not expected to keep growing as strongly. 

The national economy grew 1.4 per cent in FY24 – much slower than the 3.4 per cent recorded in FY23 – reflecting the impact of higher interest rates and inflation. GSP rose in all states in FY24, but growth moderated compared to FY23. The Northern Territory was the exception.

Growth was below the long-term average rate for each of the states, while the territories achieved growth above this long-term average.

The fastest growing economy was the Northern Territory, at 4.6 per cent, followed closely by the ACT at 4 per cent (due to their small size, these territories often exhibit more volatile growth than their larger counter parts). Western Australia saw the slowest growth rate, at 0.5 per cent.

All states and territories experienced strong growth in the health care and social assistance sector, driven by strong demand for health services. Strong growth in the transport sector was also a key contributor for states as domestic and international air travel continued to recover following the pandemic. The contribution of mining to growth in FY24 was mixed, detracting from GSP in Victoria and Western Australia, while adding to GSP in Queensland, South Australia, Tasmania, and the Northern Territory. 

The New South Wales (NSW) economy increased 1.2 per cent in FY24, which is below its long-term average growth rate¹ of 2.4 per cent and broadly in line with NSW Treasury’s forecast for FY24. The agriculture, forestry and fishing industry recorded the largest rise due to favourable conditions for fruit and vegetable production and higher international demand for livestock. The transport and logistics industry also grew strongly. Wholesale trade and retail trade were the only industries detracting from growth due to weak demand. Going forward, the NSW Treasury expects growth to pick up to 2.0 per cent this financial year before increasing further to 2.25 per cent by FY27.

Victoria’s economy grew by 1.5 per cent in FY24, below its long-term average growth rate of 2.6 per cent and slightly weaker than what was forecast by the Department of Treasury and Finance at 2.0 per cent. The agriculture, forestry and fishing industry grew the most due to strength in livestock and fruit and vegetable production. Health care and social assistance also contributed to growth, driven by strong demand for health services. Victoria projects growth to increase to 2.5 per cent this financial year, rising above its long run average to 2.8 per cent by FY26.

Queensland recorded an increase in GSP of 2.1 per cent in FY24, slightly below its long-term average of 2.4 per cent and weaker than the 3.0 per cent forecast by Queensland Treasury earlier this year. The transport and logistics industry increased the most as domestic and international air travel continued to recover following the pandemic. The mining industry was a key contributor to growth, as better weather conditions and less maintenance led to higher coal production. The wholesale trade industry detracted from growth due to weakness in demand for agricultural equipment and grain wholesaling after strength last year. Queensland Treasury expects growth of 3.0 per cent this financial year, with growth moderating over the forward estimates to reach 2.25 per cent by FY28.

Western Australia’s economy grew by just 0.5 per cent in FY24, which was well below its long-term average growth rate of 3.7 per cent (which includes record-high growth during the mining boom) and much weaker than the 1.75 per cent forecast by Treasury WA earlier this year. The construction industry recorded strong growth, both for dwelling and non-dwelling construction. Health care and social assistance also contributed to growth, driven by strong demand for health services. The mining industry was the biggest detractor from growth, as weather disruptions and maintenance resulted in less production of iron ore and oil and gas. Agriculture, forestry and fishing also detracted from growth as grain production levels were lower after strong harvests last year. Treasury WA expects growth of 2.0 per cent this financial year before increasing further to 2.25 per cent by FY27.

South Australia’s economy experienced growth of 1.2 per cent in FY24, in line with its long-run average growth rate and consistent with the Department of Treasury and Finance’s forecast for FY24. The agriculture, forestry and fishing industry grew the most due to strength in livestock and fruit and vegetable production. Health care and social assistance contributed to growth, driven by strong demand for health services. South Australia expects growth to increase to 1.5 per cent this year, increasing to 2.0 per cent by FY27.

Tasmania’s economy increased 1.4 per cent in FY24, below its long-run average growth rate of 1.8 per cent and less than the Department of Treasury and Finance’s forecast of 2.0 per cent. The public administration and safety industry recorded the highest growth due to an increase in compensation of employees. The transport and logistics industry also grew strongly. Tasmania expects slightly lower GSP growth of 1.3 per cent this financial year, before the growth rate picks up, reaching 2.5 per cent by FY27.

The Northern Territory saw the strongest annual increase of all states and territories at 4.6 per cent in FY24, well above its long-term average growth rate of 2.0 per cent, but slightly weaker than what was forecast by the Department of Treasury and Finance at 4.9 per cent. The mining industry grew by 9.5 per cent, due to higher oil and gas extraction following weakness last year as production volumes dropped due to a range of disruptions at key facilities. The Northern Territory expects GSP to increase by 2.3 per cent this year, and is forecasting strong growth of 7.1 per cent in FY26 as the Barossa LNG project becomes operational.

The ACT recorded strong economic growth of 4.0 per cent in FY24, following growth of 4.7 per cent the previous year. This was stronger than both the long-run average of 3.6 per cent and ACT Treasury’s forecast of 3.0 per cent. The result was mainly driven by growth in the public sector, reflecting an expansion of government agencies. ACT Treasury expects growth to slow to 2.8 per cent this financial year, before picking up again and reaching 3.8 per cent by FY28.

The national economy is likely to experience a recovery in growth as inflation continues to moderate and tax cuts, cost-of-living support and higher real incomes support household consumption. Most states are expected to see a recovery in growth in FY25 compared to FY24, though weaker growth is expected in the ACT and Northern Territory.

Labour markets are relatively tight, with unemployment remaining close to record low rates in most states and territories. Consumer sentiment has increased in recent months, although remains below the long-run average level. While headline inflation has fallen into the Reserve Bank of Australia’s target band, partly due to government energy rebates, underlying inflation remains above target. While it continues to moderate, upside risks to inflation persist.

National Accounts data for the September quarter (to be released on 4 December), the Commonwealth Mid-Year Economic and Fiscal Outlook (MYEFO, expected mid-December) and state mid-year budget updates will provide more insights into the nature of the recovery before the end of the year.