Over the last 15 years the NT economy has experienced an ongoing pipeline of major project investments by both the public and private sectors, stimulating the expansion of the NT economy, exports and industries (Chart 1). The NT Government’s Economic Development Framework leverages existing strengths of the NT economy, unique culture and resources and our location as the gateway between Asia and Australia to continue the development and diversification of the NT economy, and encourage new investment and growth opportunities in the future.
The NT economy grew by 1.7% to $26.2 billion in 2017-18, down from 2.7% growth in 2016-17. The NT recorded the lowest growth rate of jurisdictions, while the Australian Capital Territory recorded the highest growth, at 4.0% (Chart 2).
Growth in the NT economy for 2017-18 was primarily driven by net exports (up 68.8%), and private and public consumption (up 2.6% and 4.8% respectively). The improvement in net exports mostly reflects a strong decline in goods imports, which was down by 18.9% and contributed 2.8 percentage points to growth. Goods exports also increased in the year, up by 8.2%, while services exports and imports both detracted from growth in the year.
Private investment was the main detractor from economic growth in 2017-18, declining by 15.0%. This was driven by a 17.3% decrease in construction investment and a 24.7% decrease in intellectual property production investment. The decline follows several years of very strong growth in these areas and reflects the impending completion of the Ichthys LNG project, which had been the key driver (Chart 3).
Growth in the NT’s GSP per capita also slowed in 2017-18, up by 1.4% to $106,191, from an increase of 1.9% in the previous year but above the national gross domestic product per capita growth rate of 1.2%. Despite the lower growth rate, the NT maintains the highest GSP per capita of the jurisdictions.
The NT economy continues to be influenced by the timing of the largest project in the NT’s history, the US$34 billion Ichthys LNG project, particularly the transition from the project’s construction and commissioning phase to the operational and export phase. Over the five years from 2012‑13, it is estimated there was an average $4.0 billion per annum of additional investment, equivalent to almost 20% of total GSP. This scale of investment is unprecedented in the NT’s history and has had a substantial impact on the NT’s economic indicators.
In 2018-19, the NT’s SFD decreased by 15.6% to $24.8 billion, in year on year terms (original terms). Western Australia was the only other jurisdiction to record a year on year decline (down by 1.1%). The result was well below the national increase of 1.7%.
A decline in investment was the primary driver for the weak SFD result, falling by 44.4% in the year. The decline was a result of a 52.4% fall in private investment, as well as a 0.8% decrease in public investment. Consumption also contracted by 0.6% in 2018-19, reflecting slowing growth across both public and household consumption (Chart 4).
SFD does not distinguish between demand met by goods and services produced within the NT, or by goods sourced from interstate or overseas. Therefore, SFD is not a full measure of the economy, nor can it be used as a proxy for GSP.
In the June quarter 2019, the NT’s SFD decreased by 0.6% to $6.1 billion, mainly driven by falling private and public investment, which declined by 2.4% and 14.9% respectively in the quarter (seasonally adjusted terms). The NT recorded the weakest quarterly result of the jurisdictions, which ranged from a 0.2% decrease in South Australia to a 0.8% increase in Western Australia and the Australian Capital Territory. Nationally, SFD increased by 0.3% to $462.1 billion during the quarter.
Household consumption (otherwise classified as private consumption) measures a state or territory’s expenditure across key goods and services. These have been categorised by the Australian Bureau of Statistics (ABS) according to purpose or function.
In 2018-19, household consumption declined by0.7%, to $11.2 billion. This contraction was mainly driven by hotels, cafes and restaurants (detracting 0.26 percentage points from SFD) and recreation and culture (detracting 0.13 percentage points). This was partly offset by miscellaneous goods and services (adding 0.07 percentage points), health and housing, water, electricity, gas and other fuels expenditure (both adding 0.05 percentage points to SFD).
Public consumption decreased by 0.6% to $8.0 billion in 2018-19. State and local consumption declined by 2.8% in the year, partly offset by a 2.9% decrease in National consumption.
In 2018-19, private investment declined by 52.4% to $4.0 billion, largely due to a 57.1% decline in business investment, as a result of the completion of the investment and construction phase of the Ichthys LNG project. Investment in ownership transfer costs and dwellings also contributed to the decline in total private investment, down by 15.4% and 3.8% respectively, in the 2018-19.
Business investment in the NT was the main contributor to the negative result for total investment, with the category declining by 57.1% to $3.3 billion. The main detractors were total non-dwelling construction (down 70.4%), cultivated biological resources (down 19.9%), and machinery and equipment (down 2.1%) (Chart 6).
In 2018-19, dwelling investment declined by 3.8% to $585 million, driven by a 19.4% fall in new and used dwellings, partly offset by an increase in alterations and additions (up 13.5%) (Chart 7). Despite the increase, dwelling investment remains below the ten year average of $770 million.
The increased dwelling supply over recent years and moderating population growth has also placed downward pressure on property prices and rents. For more information, refer to the Housing page.
Ownership transfer costs also contributed to the NT’s lower investment result in the year, declining by 15.4% to $154 million in 2018‑19.
Public investment in the NT fell by 0.8% to $1.5 billion in 2018-19. The decline was driven by a 4.1% decrease in public corporations investment both Commonwealth and state and local related. This was partly offset by a 0.1% increase across general government investment, driven by the state and local governments (up 2.0%).
The Australian Bureau of Statistics (ABS) statistical treatment of state and local public investment is not comparable to NT Government expenditure published in the Budget Papers, however provides a representation of public investment relative to GSP. For more information, refer to the NT Government's finance papers.
Net exports of goods and services increased by 68.8% to $2.6 billion in 2017-18, reflecting an 18.9% decrease in goods imports, as well, likely relating to major project activity. Furthermore, NT total exports increased by by 8.2% to $5.7 billion in 2017-18, mainly related to higher export volumes of resources and commodities.
In 2017-18, net exports of services decreased by 111.0%, to -$10 million. This reflects a 7.9% decrease in services exports to $702 million and a 6.1% increase in services imports to $712 million. The decline in net exports of services in part reflects ongoing weakness in the NT's tourism industry.
The contribution of service exports to the NT economy may seem relatively small in comparison to the value of goods exports, however service exports make a substantial contribution to diversification of the NT economy and employment.
The latest monthly data published by the ABS within the ‘International Trade in Goods and Services’ release, shows that the NT’s total balance of goods traded increased by 118.5% to $8.6 billion in the year to August 2019, driven by increasing exports to Japan. Further information on the latest results for the NT’s goods trade balance can be found at the International Trade page.
GSP represents the value of economic output in a state or territory’s economy and is published annually on the ABS website. GSP is calculated using three measures: income, production and expenditure. Headline GSP represents an average of the combined income, expenditure and production measures.
The ABS also publishes quarterly estimates of SFD, a measure of domestic economic activity. However, this does not include demand for the NT’s goods and services from overseas, net interstate trade or changes in inventories. Therefore, the annual value of net exports are provided through the GSP release, though with monthly estimates available in the separate ABS publication in ‘International Trade in Goods and Services’. For more information, refer to the International Trade page.
Caution should also be noted when comparing data currently pushed to previous publications. Historical GSP data is often revised from year to year as a result of new information available to the ABS. Given the relatively small size of the NT economy, this new information and subsequent revisions can have a significant impact on the NT’s growth rates.