Economics

Overview
Investment
Labour market
Export activity
Population demographics
Governance

 

Overview

Economies worldwide are experiencing an unprecedented level of uncertainty due to the global financial crisis. The global economy has entered a downturn. The United States economy has moved into a marked recessionary period, with rapidly rising unemployment; other major economies, including Japan, are expecting a recession. Even China, which has sustained high global economic growth in recent years, is facing an appreciably weaker economic outlook.

The effects have been felt across a large number of countries, making them the most challenging economic conditions in several decades. These circumstances have made it very difficult to assess how and to what extent regional economies will be affected over the next 12 to 14 months. The outlook for 2009-10 is looking appreciably weaker than the outcome for 2008-09.

The national economy is experiencing the effects of the financial crisis, initially in the financial markets and, more recently, through lower commodity prices, a stalling in credit growth and a small decline in retail sales.

The Tasmanian economy will not be immune from these global and national developments, since about half of the State's output is destined for interstate and overseas markets. To date, the direct impacts have generally been industry specific rather than economy-wide, however it is difficult to anticipate how Tasmania will be affected.

The Department of Treasury and Finance provides advice to the Treasurer on financial and resource management and economic and fiscal policy advice to the Government.The Department also has responsibility for implementing strategies to achieve the Government's economic and financial objectives.

The Department of Treasury and Finance made available its 2008-09 Mid-Year Financial Report (Consolidated) in February 2009. 

The 2008-09 Tasmanian State Budget was delivered in Parliament in June 2008.

 

Investment 

The 2008 Regional Economic Development and Investment (REDI) map highlights major investments being undertaken throughout Tasmania.

The REDI map shows that:

• Tasmania has $3.8 billion worth of projects either under construction or committed to
• $1.2 billion worth of projects are under construction
• 155 development projects across the State are committed to or under construction, as opposed to 193 in 2007
• $4.9 billion worth of projects are under consideration 
• the number of developments committed to rose from 82 in 2007 to 90 in 2008

• the number of projects under construction has dropped in 2008 from 2007  

• the total cost of all projects is $8.7 billion.

The 2008 REDI map is available to download from the Department of Economic Development and Tourism website.
 

Private sector investment

Private sector investment in Tasmania increased by 2.3% in the December quarter 2008 to be at a record high of $1.29 billion. This is the third highest growth in private investment behind the Northern Territory (8%) and the Australian Capital Territory (3.5%).

The likely commencement date for several major projects has been reassessed in light of current credit conditions, especially major investments that rely on a large share of funding from overseas.

In the year to March 2009, residential building approvals increased by 9.6% (or $64.9 million) in Tasmania, and the number of dwelling approvals has increased by 4%, 13.5% higher than one year earlier.

Capital expenditure by the private sector in Tasmania has shown strong growth, with figures released in February 2009 showing private new capital expenditure increased by 28.5% in the year December 2008 to $1.2 billion in real terms.

Information on investing in Tasmania is available on the Department of Economic Development and Tourism.

 

Labour market

According to Australian Bureau of Statistics data, the labour market in Tasmania has been severely affected by the current economic downturn. Of all the states and territories,Tasmania recorded the largest decrease in the number of people employed in April 2009. In trend terms, employment in the six months to April 2009 decreased by more than 3,400 persons - a decrease of 1.5%. This was accompanied by a 1.1 percentage point increase in the unemployment rate. The situation with Tasmania's unemployment rate as at April 2009 was 5.3%, which was 0.2 percentage points below the national level. 

The unemployment rate is expected to increase further in Tasmania as global economic conditions worsen. Reduced demand from overseas for Tasmanian exports, and declines in investment and construction will be the main contributor to this.  

Export activity  

Exports to both interstate and overseas markets are a major contributor to Tasmania's overall economic performance. Manufacturing, the maritime sector, food and beverage and information and communications technology are some of the sectors leading the way in exports.

The Tasmanian Treasury reports that the upturn in the value of overseas exports since mid-2004 has largely been driven by very strong increases in commodity prices. However, these price rises have recently been unwinding in light of concerns over future world economic growth and reduced demand for commodities.

Japan was the single largest importer of Tasmanian goods in the year to March 2009, accounting for 18.6% of the State's total exports, followed by Korea, which overtook Hong Kong as the second largest export destination. Other export markets are: Malaysia, United States of America, New Zealand, Indonesia, Germany, India, China, the Philippines and Singapore.

The Australian Bureau of Statistics reported in May 2009 that overseas exports from Tasmania increased by 3.0% to $3.65 billion in the year to March 2009. The value of exports has been boosted recently by the depreciation of the Australian dollar but this is likely to be partially offset by a reduction in exports to those countries experiencing slowing economic conditions.  

Further information on Tasmania's export trade is available from the Department of Economic Development and Tourism.