The Australian economy lost momentum from mid-2012 as world growth slowed, mining investment peaked and domestic headwinds persisted. GDP growth at 0.6 per cent per quarter, 2.6 per cent a year in the June quarter 2013 is clearly below trend. So where to from here? GDP growth is forecast to be 2.2 per cent in the year to the second quarter of 2014, improving gradually to 2.5 per cent in the year to 2014 fourth quarter. This is as international conditions remain challenging. It is instructive to inform our view on the Australian economy via a state-by-state assessment.
Our analysis of the state economies reinforces our big picture view: namely, that current conditions are subdued and that any near-term improvement in conditions is likely to be gradual.