QLD BUDGET 09-10: Slowing investment, trade delay recovery

By: Graham Gardiner


Queensland is facing a long-road to recovery, with weakening business investment, falling exports and rising unemployment hindering growth. Forecasts contained in

Queensland is facing a long-road to recovery, with weakening business investment, falling exports and rising unemployment hindering growth.

Forecasts contained in yesterday’s Budget reveal Gross State Product (GSP) will contract 0.25 percent over 2009-10, before improving marginally to 2.75 percent in 2010-11 as the global recovery gathers pace.

Driven by a turn-around in confidence and consumption, the State’s economic growth is projected to strengthen to 4.75 percent in 2012-13.

It is predicted GSP will recover a further 4.25 percent in 2011-12 and 4.75 percent in 2012-13.

While lower interest rates and government initiatives should see a recovery in new house construction in 2009-10, tight lending conditions are forecast to weigh in on medium-to-high density construction.

Business investment is also set to fall 17 percent over this period, due to rising vacancy rates and limited access to funding.

Continuing the trend of negative figures, the economies of Queensland’s major trading partners are forecast to contact by 3 percent in 2009, before recovering to mild growth of 1.5 percent in 2010.

While there will be an export decrease of 2.25 percent in 2009-10, it is expected to recover 3 percent in 2010-11.

Similarly, imports of goods and services will decrease by 3.25 percent in 2009-10, before improving to 1 percent growth in 2010-11.

With economic output predicted to decline in 2009-10 and stage a mild up-turn in 2010-11, employment is forecast to fall by 0.75 percent and recover by 1.25 percent in these respective years.

As a result, population growth is forecast to exceed jobs growth, causing the year-average unemployment rate to rise 6.25 percent in 2009-10, before peaking at 7.25 percent in 2010-11.

Queensland’s population is predicted to increase by 2.25 percent over 2009-10, and 2 percent every year through to 2012-13.

Getting to the finer points of yesterday’s Budget predictions, inflation, wages, household consumption and investment are all facing a shaky recovery.

Inflation is set to rise 2.5 percent every year until 2012-13, when it will spike at 2.75 percent.

The wage price index is forecast to increase 3.5 percent in 2009-10, 3.25 percent in 2010-11, 3.5 percent in 2011-12 and 3.75 percent in 2012-13.

Household consumption is predicted to increase by 0.75 percent in 2009-10, before rising by a stronger 2.25 percent in 2010-11.

Private investment is tipped to contract by 11.5 percent in 2009-10, before recovering to 1.75 percent growth in 2010-11.

As a result of yesterday’s multi-billion dollar splurge to ensure the future of Queensland’s economy, the Budget will not return to surplus levels until 2016-17.

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