Aus economy: recovering and reopening

Economic momentum across Australia’s states and territories slowed in the three months to December, the ANZ Stateometer found, although economic performances remained largely above trend.

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Two regions were outliers with momentum in New South Wales and the Australian Capital Territory accelerating as COVID-19 restrictions were lifted. The ACT remained below trend.

“The reopening of international borders should drive both services exports and imports, but at what pace is unknown.”

The economic impact of the pandemic continues to be felt in early 2022 although ANZ Research expects this to be temporary. Indeed, the economic outlook for 2022 is very positive.

ANZ Research expects Australia’s unemployment rate to fall to the low 3-percentile range this year. Wage growth will likely shift higher and core inflation is forecast to be above the Reserve Bank of Australia’s target band. This strength will be seen across the states and territories.

The reopening of international borders should drive both services exports and imports but at what pace is unknown. Expect to see a divergence across states and territories as the east coast generally attracts more tourists and students.


The ANZ Stateometer found NSW bounced back from its pandemic-driven decline in third quarter on the back of improvements in the consumer and labour components of the index. Victoria’s performance is still skewed by its extended lockdown in 2020.

Queensland, South Australia, Western Australia and the Northern Territory all saw momentum decelerate but economic performance stayed above trend.

Strong commodities demand and higher prices saw Queensland outperform on trade. The NT’s trade performance lifted but lower iron ore prices during the fourth quarter weighed on WA. Tasmania’s momentum was largely unchanged.

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The ANZ Stateometer is a set of composite indices that measure economic performance across Australia’s states and territories.

For each jurisdiction, the index extracts the common trend across multiple indicators (between 24 and 32, depending on data available in the jurisdiction). The economic indicators are monthly data series and cover the consumer, business, housing, labour and trade sectors.

Developments across this diverse country are rarely uniform and we hope these geographically specific indices help you to see through the haze of state by state data and more intuitively piece together the state of the national economy.

Bansi Madhavani, Catherine Birch & Adelaide Timbrell are Senior Economists, and Arindam Chakraborty is a Junior Economist at ANZ

This article was originally published on ANZ’s Institutional Insights website

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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