blue skiesAustralia may be the lucky country. But following the mining boom, NSW is poised to be the luckier state.
NSW is set to gain a disproportionate share in the next phase of Asia’s economic boom because of its strength in five super-growth sectors forecast to be worth an extra $250 billion to the national economy over the next 20 years.
A report by Deloitte Access Economics says Asia’s impact on Australia is changing in ways that play to NSW’s economic strengths. Five key sectors – tourism, international education, wealth management, gas and agribusiness – are forecast to grow more than 10 per cent more quickly than the global economy over the next 20 years. Each of these sectors is bigger in NSW than in any other state or territory, making the next phase of the Asia boom a perfect fit for the premier state. NSW is “ready for take off”, Deloitte Access Economics says.
State and federal governments face thorny policy challenges in at least two of the sectors identified in the report – gas and agribusiness. While NSW has significant gas reserves, there is considerable community opposition to the use of new extraction techniques. Opposition to the foreign ownership of farming land could also hamper the big investments needed if Australia is to make the most of Asian demand for its agricultural products and farming know-how.
For Australia as a whole, the five super-growth sectors could be collectively as big as the mining boom which has re-shaped the Australian economy in the past decade. But for NSW the five sectors outweigh mining by a factor of 2½.
“The next boom will be much better distributed than the last one and it is going to be in sectors where NSW has an absolute advantage,” said the report’s co-author, Chris Richardson.
But he warns this economic windfall is not inevitable.
“This won’t just fall into our lap,” he said. “We’ve still got a lot of heavy lifting to do if we are to actually cash in on the potential.”
A lot will depend on how Australian companies respond to new opportunities in Asian markets.
“Although government policies can help, success or failure lies more in the aggregate actions of the business world,” says the report, Positioning for Prosperity? Catching the Next Wave.
For much of the past decade Asian demand for raw materials has boosted investment and jobs growth in the mineral-rich states of Western Australia and Queensland more than other states. The mining boom also helped push up interest rates and the value of the Australian dollar. Higher interest rates weighed on the NSW economy – with its big finance sector and heavily indebted households – more than other states. The high dollar also hampered key NSW exporters such as tourism operators, manufacturers and the higher education sector.
But the Deloitte report says the strong presence in the NSW economy of all five super-growth sectors positions the state “for future prosperity”.
The original release of this article first appeared on the website of Hangzhou Night Net.