NSW named as Australia’s weakest state for economic growth as mining boom takes WA to the top

A lack of a boom industry or a specific economic driver has made New South Wales the weakest state in the country when it comes to economic growth, according to new research by broker CommSec.

CommSec’s state of the states report – which measures quarterly economic growth, retail spending, equipment investment, unemployment, construction work, population growth, housing finance and dwelling commencements – found that Western Australia recorded the highest growth, nabbing top spot from the Australian Capital Territory which led in the previous quarter.

CommSec chief economist and report author Craig James expects WA to outperform if the Chinese resources boom continues.

CommSec economist Savanth Sebastian says NSW doesn’t have the “X” factor that other states have.

“Population growth has been above average and that has supported NSW to some extent, but if you look across at other state economists – there’s the mining boom in WA, the rebuild in Queensland, Victoria has had healthy dwellings starts, and even Tasmania has low unemployment rates which is driving retail sales activity, and that’s much the same for the Northern Territory,” Sebastian says.

But Sebastian says the NSW Government’s move to abolish stamp duty should deliver some improvements to the state’s housing industry.

CommSec also says an extended period of interest rate stability could provide momentum for NSW and Queensland, and flow through to housing.

James says the ACT is being boosted by above-average population growth, which is driving construction activity. “But the lift in the jobless rate raises questions about whether the strong economic performance can be maintained,” he says.

“There is unlikely to be major changes in the middle rankings with Victoria and South Australia modestly ahead of Tasmania and Northern Territory. But there is little to separate these economies.”

James warns that local tourism operators will battle fewer international visitors and more Aussies travelling abroad as the Aussie dollar remains high.

He also tips consumer conservatism and the “uncertainty provided by proposed carbon and mining taxes to provide challenges for all the states and territories over the next three to six months.”