Victoria and South Australia feel the pain. Two quite different sets of statistics but the message from them is the same: Victoria and South Australia are having the toughest economic time.
Yesterday it was the Australian Bureau of Statistics’ figures for engineering construction activity. The two southern states most dependent on manufacturing saw a decline in trend terms while in every other state the trend was up. Today the retail sales figures from the ABS show Victoria and South Australia lagging behind most of the rest.
On the same wave length. Australia’s Reserve Bank and the Asia Development Bank based in Manila are delivering similar messages about economic conditions. This week the Reserve Bank cited weakening growth prospects in China as a reason it was lowering official interest rates. Overnight, the ADB reported that dimming global growth prospects and soft domestic demand in the region’s two largest economies — China and India — was slowing the pace of developing Asia’s expansion. Growth is now expected to slide from 7.2% in 2011 to 6.1% in 2012, with a bounce back to 6.7% in 2013.
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The key messages in the ADB’s report:
- Developing Asia’s growth is projected to expand by 6.1% in 2012 and by 6.7% in 2013, down significantly from 7.2% in 2011;
- The PRC is forecast to grow by 7.7% this year and by 8.1% in 2013, considerably more slowly than the robust 9.3% growth of 2011;
- India will see GDP growth slow to 5.6% in 2012 and bounce back to 6.7% in 2013;
- Weakening growth momentum will temper price pressures, pushing inflation in the region down from 5.9% in 2011 to 4.2% in both 2012 and 2013;
- The ongoing sovereign debt crisis in the euro area and the looming fiscal cliff in the United States pose major risks to the outlook;
- Developing Asia has no widespread, urgent need at the moment for countercyclical policy intervention;
- Countries will have to rely more on enhancing productivity and efficiency to secure future prosperity;
- Developing Asia’s service sector is to play a growing role as economies that graduated from agriculture to industry evolve further into service economies;
- A key challenge is to raise service sector dynamism by moving towards high-value modern services, such as information and communication technology, finance, and professional business services;
- A vibrant service sector would have broad economic benefits, including the creation of jobs for women in particular, thus supporting inclusive growth;
- Lack of human capital, inadequate infrastructure and restrictive regulations are major bottlenecks for developing a modern service sector.
News and views noted along the way: