Slow growth, fall of China to hit Qld economy, treasury boss warns

Slow population growth coupled with a declining international appetite for fossil fuels will create significant economic headwinds for Queensland’s economy, a leading economist has warned.

Slow population growth coupled with a declining international appetite for fossil fuels will create significant economic headwinds for Queensland’s economy amid an 80 per cent chance of recession, a leading economist has warned.

Queensland Treasury Corporation chief economist Michael Anthonisz used the Queensland Futures Institute breakfast on Wednesday to reveal analysis done by the organisation earlier this year detailed the likely chance of a national recession.

“The model-based estimates we presented in that paper pointed to a 50 to 60 per cent probability of recession in the next 12 months and 80 per cent probability in the next two years,” he said.

Mr Anthonisz, however, said Australia’s limited experience in recessions meant the modelling could be incorrect.

“I actually think it’s less likely that we do have one than more likely,” he said.

“It is a little bit of a fool’s errand to over-interpret those sorts of predictions but I think they’re useful for one point … (they) convey that there is a material risk to the economy.”

Mr Anthonisz said the health of household finances and a tight labour market was likely to keep Queensland’s economy from going backwards.

“Given how hard it has been to secure and retain suitably experienced and talented staff, businesses will be loath to let go at the first sign of softening,” he said.

“We’ve got population growth. it’s very hard to get a recession if the population is growing.”

The Queensland Futures Institute breakfast heard about the state of Queensland's economy from several economic experts. Picture: Supplied

Queensland’s growing trade relationship with India is also expected to be a source of state prosperity, Mr Anthonisz said, with $17.71bn in exports at the year ending June 30.

“India is currently Queensland’s second-largest trading partner and I don’t think it requires imagination to consider that it could very well be the state’s biggest in the coming years,” he said.

“You can reflect on the size of its domestic market, its geographical proximity to the state … it’s hard not to get excited about what lies ahead in terms of Queensland’s trade relationship.”

ANZ chief economist Richard Yetsenga said 2024 would be a “year of reckoning” for China as growth slows – causing challenges for Queensland’s resources-heavy economy.

“The opportunities are now looking elsewhere and eyes are looking elsewhere,” he said.

“That’s an important transition for the export sector to deal with.”

Queensland’s share of the national population has increased from 15 per cent to 20 per cent over the past 40 years, with the share of the national economy increasing at the same rate.

Mr Anthonisz warned flatlining population growth predicted for Queensland risked the ability to continue growing.

“If we want to continue to grow our share of the national economic pie we need to find other levers to pull or we need to rely on other things falling our way, whether it be commodity prices staying high for longer or us finding ways to be more productive than other states,” he said.

“If that population story does sort of cease to become a tailwind for the state’s economy, what are we going to do?”