New research report sheds light on the economic wellbeing of Australia’s cities and regions exposing the challenges that communities faced during the 2020-21 financial year.
The report fills a void in economic policy research and shows small area estimates of Gross Regional Product (GRP) of every major city and region in Australia and the regional breakdowns of unemployment and the gender mix of the labour force.
The report shows that national growth reached 1.5% in 2020-21, but Australia’s economy was a roller coaster ride of economic shocks, relative calm, and buoyant recovery across the nation.
Brisbane was the fastest-growing city and SA the fastest-growing state. Greater Melbourne's COVID lockdowns resulted in a recession in the city, while Tasmania’s economy grew faster than Australia’s as a whole for the third year in a row. The recovering agriculture industry pulled regional NSW and QLD into positive growth, while tourism loss dragged on almost every economy across the country.
Dr Marcia Keegan, Senior Associate at SGS and report lead author, said the report reveals important insights into the differing experiences and economic wellbeing of communities throughout Australia, insights often lost under Gross Domestic Product (GDP) calculations.
The gradual economic recovery Australia has experienced in 2020-21 following Australia’s worst economic downturn in decades has not been spread evenly across the country – some cities and regions have rebounded strongly while others have gone backwards.
Greater Melbourne was in recession for 2020-21, largely due to its lockdowns in the second half of 2020; but regional Victoria saw positive growth. Greater Sydney and Perth grew modestly, while Brisbane and Adelaide grew more strongly.
All major cities impacted by the COVID-19 pandemic bounced back quickly except Melbourne, which is only now showing some signs of labour force recovery.
Recently released data for the September 2021 quarter shows that NSW, Victoria, and ACT, which all experienced COVID outbreaks and associated lockdowns between July and September, all saw an economic decline.
The significant national trends this year have been the buoyant recovery of the agriculture industry, which grew 22% compared to the previous year bolstering many regional areas, and the loss of tourism which impacted almost every economy across the nation.
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Key findings by state
- The drought breaking across large areas of Australia has given an enormous stimulus to Agriculture, Forestry and Fishing which grew by 22% compared to 2019-20. This industry contributes between 3% and 20% of regional economies, and its growth this past year was responsible for Rest of NSW and Rest of QLD experiencing positive growth – and potentially avoiding recession.
- International tourism in 2020-21 was only 3.5% of its pre-COVID levels, and domestic tourism only 80% of pre-COVID levels. Almost all cities and regions saw falls in their transport industries, with the strongest falls in tourism-reliant cities like Sydney and Melbourne and areas like regional Queensland.
- Greater Melbourne remained in recession, with GDP falling 1.6% in 2020/21. Melbourne’s second wave saw unemployment remaining between 7% and 8% from May to November 2021, and the labour force participation rate falling by 3 percentage points.
- Regional Victoria’s economy grew 3.9% driven predominantly by the agriculture industry; labour force participation surged when COVID-19 lockdown restrictions eased in October 2021 – but not enough to lift Victoria out of recession.
- The ACT’s economy grew by 2.8% in 2020-21, driven by public service and Professional services. The recent COVID lockdowns from August 2021 saw ACT suffer the largest loss of payroll jobs (more than 10%) of any state or territory during the 2020 COVID-19 lockdowns. State final demand fell by 1.6% in the September 2021 quarter as a result.
- Regional Queensland showed growth last financial year while Brisbane suffered a sharp drop in GDP; this financial year, the tables have turned, and Brisbane grew by 3.9% while regional Queensland grew 0.8%.
- Brisbane’s growth has been due to most industries performing moderately well rather than any particular industry performing unusually strongly. Regional Queensland saw a recovery in Agriculture but continued to be hit by the loss of tourism and the decreasing prices and demand for LNG.
- Without Agriculture contributing 0.8% points of growth, Regional Queensland would have been close to falling into recession.
- Sydney was hit harder than regional NSW during COVID-19 lockdowns but rebounded with a modest 1.7% economic growth. Regional NSW avoided recession (1.1% growth) following a much-needed resurgence in the agriculture industry after the devastation of the drought and Black Summer bushfires.
- After narrowly avoiding recession last financial year, Tasmania’s economy rebounded strongly growing 3.8% in 2020, although the unemployment rate was slow to recover, reaching 5.1% in October 2021. Agriculture provided half of Tasmania’s growth followed by Health and Aged Care.
- Tasmania’s economy has been growing faster than Australia for the last four years, after growing more slowly since 2010.
- South Australia had the strongest growth of all states and territories at 3.9% driven by growth in Agriculture and Manufacturing, Transport Equipment Manufacturing and Food Manufacturing.
- Adelaide’s labour force participation rate has now exceeded pre-COVID-19 levels (79%), and unemployment has trended downwards for most of 2021, falling from 7.8% in February to 4.5% in August
- Regional South Australia had the strongest growth of all the cities and regions at 8.4%, driven by bumper returns in Agriculture and strong growth in Manufacturing.
- The Northern Territory’s economy avoided recession in 2019-20 but fell into recession in 2021 (-0.6% growth) due to a decline in Oil and Gas extraction as commodity prices fell and production volumes were reduced.
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