The Summer 2018 edition of the NSW Economic Update presents a current snapshot of the NSW economy and provides relevant points of comparison with other Australian States and Territories.
For the eighth consecutive quarter, New South Wales has been the best performing State in Australia. Commsec's January 2018 State of the States Report found that NSW ranked first for five of the eight economic indicators: retail trade, dwelling starts, equipment investment, construction work and unemployment. The State is second on economic growth, and third for population growth and housing finance.
2017 saw Australia record its 26th straight year of uninterrupted economic expansion, while NSW posted strong Gross State Product (GSP) results and continues remained the strongest performing jurisdiction in Australia. While economic prospects look promising for 2018, some observers argue that these headline economic results mask a national economy largely propped up by high population growth. In the decade to June 2017, the estimated resident population increased by approximately 3.8 million to reach 24.6 million people; of this increase, almost 1.2 million (27.2%) was recorded in NSW, with 60.1% of this growth coming from Net Overseas Migration (NOM).
A growing population has its benefits. For example, strong population growth boosts aggregate demand and therefore output and employment growth, while high population growth in cities like Melbourne and Sydney may help mitigate the risk of residential property oversupply. However, there are drawbacks associated with this rapid growth. It is argued that high migration keeps wages low and is exacerbating issues of underemployment for domestic workers, while an increasing population requires greater levels of infrastructure: an expensive challenge given existing infrastructure backlogs.
The Commonwealth Bank has argued that there is a need for a comprehensive and open discussion around the policy direction Australia is taking with regard to population and immigration. With a number of NSW Government Ministers publicly stating that Sydney is ‘full’, perhaps 2018 will see renewed discussion of this issue?
