Lockdown slams NSW economy but bounce-back in full swing
The NSW economy bore the brunt of the economic downturn sparked by the Delta lockdowns but Treasurer Matt Kean says the rebound is already happening and business confidence is higher than ever.
NSW
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The NSW economy bore the brunt of the economic downturn sparked by the Delta lockdowns over the three months to September, with state final demand plunging by 6.5 per cent.
Nationwide, the economy proved more resilient than expected to the Delta wave, but still suffered a 1.9 per cent decline in GDP that left national output lower than before the arrival of the Covid-19 pandemic.
It was the third biggest quarterly contraction in 50 years.
Treasurer Josh Frydenberg said while the national accounts were “a reminder of the heavy economic costs of lockdown, there is good news for our economy in that the lockdowns are behind us”.
“The Australian economy is recovering strongly,” the Treasurer said, pointing to a sharp recovery in retail trade and jobs as health restrictions across NSW, Victoria and the ACT were progressively removed through October.
The seasonally adjusted figures also revealed that Australia’s economy was now 0.2 per cent smaller than it was in December 2019, before the pandemic.
NSW’s performance was worse than Victoria and the ACT, which recorded moderate declines in state final demand of around 1.5 per cent.
Sydney was in lockdown for the entire quarter, contributing to our state’s 6.5 per cent drop in state final demand.
NSW Treasurer Matt Kean said the result wasn’t a surprise but is “backwards looking”.
“Real time indicators of spending and mobility have already rebounded to around or slightly above the levels seen prior to the onset of the Delta outbreak. Business confidence is at record highs and consumer confidence is also up,” Mr Kean said.
The nationwide decline in activity through the September quarter was milder than the 2.7 per cent contraction tipped by economists leading into today’s data, although the range of forecasts had been wide.
“There will be challenges ahead, but with vaccination rates here in Australia having reason to be among the highest in the world, we can and we must live with the virus and its variants,” Mr Frydenberg said.
With more than half of the population under stay-at-home orders for long stretches during the quarter, household consumption dropped 4.8 per cent.
Household spending in NSW and the ACT fell by about 11 per cent, and by 5.2 per cent in Victoria.
The combination of lockdowns and a big boost to support helped the household savings rate jump from 11.8 per cent to 19.8 per cent.
Deloitte Access Economics partner Chris Richardson said “in the quarter households added another $40bn to their savings, making it almost a quarter of a trillion dollars up on pre-pandemic”.
Labor Treasury spokesman Daniel Mookhey described the results as the NSW economy being “hit for six”.
Mr Mookhey called for the government to fast-track economic stimulus measures promised for Western Sydney.
“The risk is that the ‘tale of two cities’ turns into a two-speed recovery, with Sydney’s West left behind,” he said.
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