Australia and New Zealand Banking : NSW and Victoria mitigate resources downturn

Media Release

For release Tuesday 1 September 2015

NSW and Victoria mitigate resources downturn -But ANZ report shows economic growth in five Australian states remains below average-

Report highlights:

 The ec onomic performanc es of New South Wales (NSW) and Vic toria c ontinue to improve, with NSW extending its lead.

 Growth rates in other states remain below trend.

 The mining states have stalled for now, while South Australia (SA) has fallen further behind.

 Tasmania is at risk of losing momentum, while the Australian Capital Territory (ACT)

was the biggest improver.

ANZ's Stateometer, a new ec onomic measure of Australia's st ates and territories, rates NSW

and Vic toria as the c ountry's top ec onomic performers over the past year.

Strong residential investment, improving business and labour market c onditions and poc kets of strength in c ommerc ial property, have lifted ec onomic activity in NSW and Vic toria as Australian resourc e investment c ontinues to dec line.
The report also showed ec onomic growth in five Australian states was below trend in the year to June, while Tasmania is c lose to its trend rate.
One of the report's authors and ANZ Co-Head of Australian Ec onomic s Cherelle Murphy said: "Ec onomic ac tivity in NSW and Vic toria gained momentum over the past year and rec orded growth rates above their long-run averages. Given the improvement in ac tivity for NSW and Vic toria, which together account for more than half of Australia's GDP, we expec t an ongoing, although slow ec onomic recovery for Australia."
Tasmania and Queensland share similar c haracteristics to the stronger states inc luding solid housing and private c onsumption and are also benefiting from the deprec iating Australian dollar. "We expec t their below-trend lower momentum position on the ANZ Stateometer will c hange as these drivers lead to rec overy rather than further deterioration."

Western Australia (WA) and SA are experienc ing downward momentum c aused by WA's

ongoing mining c onsolidation and SA's weakening industrial sector.

Ec onomic ac tivity inc reased in the Northern Territory due to rec ent improvements in its labour market. However it is expec ted to remain well below its growth trend rate due to a likely ongoing dec line in overall business investment.
The ACT inc reased its momentum signific antly but its performance has been well below its trend rate sinc e Commonwealth budget tightening began around 2011.

A ustralia and N ew Z ealand B anking Group L imited A BN 11 005 357 522

Despite momentum improvements ac ross most states, ANZ expec ts limited GDP growth in the June quarter due to the below trend ec onomic performanc es of Queensland, WA, SA, NT and the ACT.

"With strong inter-linkages between NSW and Vic toria and the rest of the c ountry, the weight of the resourc es downturn does present a downside risks to these ec onomies," Ms Murphy said. "The bac kdrop of falling c ommodity pric es and unsettled financial markets are also downside risks we are keeping a c lose eye on."
A c opy of the report is available at ANZ Live.
For media enquiries c ontact:

Simone Stella, Associate Direc tor, IIB Communic ations

Tel: [phone] or [phone]

Email: [e-mail]/ Twitter: @Simonestella8