Queensland economy to stare down global financial crisis: economic outlook remains strong

09 December 2008

Queensland is forecast to outstrip the nation’s growth for the thirteenth straight year, despite the global financial crisis, Treasurer Andrew Fraser said.

Announcing the Bligh Government’s Major Economic Statement today, Mr Fraser said the global financial crisis will not stop Queensland’s growth.

“The global financial crisis has claimed many casualties, but the growth of the Queensland economy will not be one of them,” Mr Fraser said.

“We will ward off recession.

“Preserving growth and preserving jobs is our focus – that’s why we have taken the strong decision to sacrifice the surplus for the sake of preserving our capital program.

“The global financial crisis means growth will slow – that’s for sure, but we still expect to record 3% growth for the year.

“That’s out in front of the Australian forecast of 2%.

“We’ve been out in front of the national rate of growth for the past 12 years, and we will stay there.

“The global financial crisis is redefining economic outlooks everywhere.

“If you are going to be anywhere in the world its Australia, and if you’re going to be anywhere in Australia, its Queensland.”

Mr Fraser said while the world’s major economies as a whole face their first recession since the second World War, the resilient Queensland economy is once again tipped to be a benchmark performer.

“All of the Group of Seven (G7) nations either are in or on their way to recessions and many other OECD countries are following suit.

“Australia remains uniquely placed to stave off a downturn in growth, and Queensland is leading the charge.”

Compared with Queensland’s growth forecast of 3%, New South Wales is forecasting growth of just 1.25%, while Victoria has predicted their economic growth will halve from 3% - to just 1.5%.

But Mr Fraser said Queenslanders should not expect the global financial crisis to pass by without leaving some scars.

“These are unprecedented times, and while we are well-guarded against the fallout, we are not immune.

Mr Fraser said slowing employment growth in the economy would lead to rising unemployment .

“The nation’s unemployment rate is now predicted to reach 5% by June quarter 2009.

“Rising unemployment will be our number one challenge in 2009 and that’s why we are so focussed on preserving the capital program.

“Slowing jobs growth and higher labour-force participation are forecast to see the unemployment rate rise from a year average rate of 3.7% in 2007-08 to 4.25% in 2008-09.“

Mr Fraser said one casualty would be the state’s budgeted surplus in 2009-10 and 2010-11.

“We have revised our budgeted surplus for this financial year down to $54 million in 2008-09.

“The budgeted surplus of $809 million in June was put in place to act as a buffer against declining revenues. It has served its purpose.

“As we have already announced, we will put the Budget into deficit to preserve the capital program.

“Deficits will be recorded in 2009-10 ($124 million) and 2010-11 ($85 million), before returning to surplus in 2011-12 ($92 million).

“We are investing in Queensland’s future by securing jobs. That is the Bligh Government’s number one priority.

“Keeping Queenslanders in jobs will keep the Queensland economy moving forward.”

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