Fed: NSW already in recession, Vic on brink, forecaster warns
19 Jan 2009 12:01 AM
EDS: EMBARGOED to 0001 (AEDT) Monday January 19.
CANBERRA, Jan 19 AAP - NSW is already in recession, with Victoria and the other states set to follow, a leading economic forecaster has warned.
Access Economic's Business Outlook for December 2008 - released on Monday - paints a grim picture for the nation's biggest states and looming slowdowns in Western Australia and Queensland which it says will bear the brunt of a global downturn.
NSW consumers and WA miners were at the heart of the impending recession in Australia, Access said.
"NSW is already in recession. It is drowning ... with its economy contracting at US-style rates, and 2009 will be a long year," said the forecaster.
Victoria would take its economic pain early as manufacturing bore the brunt of its slowdown, while finance and business services also were in "big trouble".
"Having successfully defied gravity for some time, Victoria has been hitting heaps of turbulence."
Manufacturers, especially carmakers, were floundering while the rural recovery experienced in other states did not eventuate.
Both NSW and Victoria, however, will be in a relatively better condition than Queensland and WA when lower interest rates and exchange rates provide the preconditions for a revival in 2010-11.
That's because the sunbelt states will feel their slowdown later and longer, Access says.
The fall in commodity prices - caused by reduced demand from overseas and contract re-negotiations in April - will leave Queensland in the slow lane for longer.
"Current negatives revolve around consumers and tourism ... job growth is off the boil while housing affordability relative to other states is more of a problem than it has ever been."
Western Australia's share of the Australian economy in 2010 could be at a new peak, before heading downhill in mid-2011.
How long and how bad it is for WA depends on how bad the news is globally, Access says.
There is optimism China and India will bounce back in 2010 lifting demand for the state's mineral resources, but pessimism about commodity prices.
Access is predicting a later and longer downturn for WA than official forecasts.
It is also forecasting a tough time for the Northern Territory, no boom or bust for South Australia, and relatively good times ahead for Tasmania - where business and households have less debt - and the ACT because of its large public sector.
