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 and exports (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 per cent 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 the year to March 2019, the NT’s SFD decreased by 14.2% to $25.8 billion, in year on year terms (original terms). Western Australia was the only other jurisdiction to record a year on year decline (down by 1.2%). The result was well below the national increase of 2.3%.
A decline in investment was the primary driver for the weak SFD result, falling by 40.5% in the year. The decline was a result of a 48.3 per cent fall in private investment, which was partly offset by a 3.5 per cent increase in public investment. Consumption growth slowed to 0.7 per cent in the year to March 2019, reflecting slowing growth across both public and private 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 March quarter 2019, the NT’s SFD decreased by 2.3% to $6.1 billion, mainly driven by falling private investment, which declined by 12.3% in the quarter (seasonally adjusted terms). The NT recorded the weakest quarterly result of the jurisdictions, which ranged from a 0.3% decrease in Western Australia to a 0.7% increase in Tasmania. Nationally, SFD increased by 0.1% to $462 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 the year to March 2018, growth in household consumption slowed to 0.6%, to $11.3 billion. Growth in the year was driven by miscellaneous goods and services (contributing 0.13 percentage points to SFD) and food consumption (contributing 0.08 percentage points). This was partly offset by net expenditure interstate and hotels, cafes and restaurants (both detracting 0.12 percentage points each from SFD).
Growth in public consumption slowed in the year to March 2019, to 0.9 per cent. State and local consumption declined by 0.1 per cent in the year, which was offset by a 2.7 per cent increase in National consumption.
In the year to March 2019, private investment declined by 48.3% to $4.9 billion, largely due to a 52.9% 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 also contributed to the decline in total private investment, down by 12.3% in the year to March 2019.
Dwellings investment in the Territory increased by 8.6% to $641 million in the year to March 2019. This was as a result of a 21% increase in alterations and additions, which was partly offset by a 2.6% decrease in investment in new and used dwellings.
Business investment in the NT was the main contributor to the negative result for total investment in the year to March 2019, with the category declining by 52.9% to $4.1 billion. The main detractors were total non-dwelling construction (down 61.9%), and cultivated biological resources (down 23.2%) (Chart 6) .
In the year to March 2019, dwelling investment increased by 8.6%, to $641 million driven by a 21% increase in alterations and additions (Chart 7). Despite the increase, dwelling investment remains below the ten year average of $775 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 12.3% to $164 million in the year to March 2019.
Public investment in the NT increased by 9.1% in the year to March 2019, to $1.6 billion. The increase was driven by a 16.5% increase in state and local public investment, as well as a 4.2% increase in public corporations investment. This was partly offset by a 1.9% decrease in national public investment.
The increase in public corporations was the result of higher investment from state and local corporations (up 9.9%), partly offset by an 8.5% decline in investment from Commonwealth corporations.
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 101.5% to $7.3 billion in the year to May 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.