NT economy poised for growth, but traditional obstacles remain: Deloitte

by | Jan 20, 2021 | Business | 0 comments

An economist with Deloitte says there is “real cause for optimism” about the NT economy in 2021, citing factors that may support a bounce-back of the Territory’s economy that was depressed before the economic effects of COVID-19.

Aaron Hill, an economist with Deloitte Access Economics, said he is positive that the NT’s economy could improve this year given its ability to bounce back last year after the pandemic hit.

However, encouraging population figures to recover while attracting private investment is expected to be the major challenge as always, a new Deloitte report found.

“I think that there is real cause for optimism [in the NT]. As long as we’re able to continue to keep the pandemic under control as we’ve managed to do so far,” Mr Hill told ABC Radio Darwin.

Deloitte’s projections are based on the assumption that international borders will start to reopen from the beginning of the last quarter of the year, with a travel bubble with New Zealand in place, which will likely broaden to cover much of the world by the end of 2021.

“That’s going to be central for two parts of the entire economy, in particular tourism, which is a fantastic support, and right across both the Top End and also Central Australia – then international education will also be a beneficiary from those borders reopening,” he said.

“The Territory’s actually been the first out of all the states and territories to start welcoming back international students with 63 international students starting at CDU, under a deal with the feds. And so it’s a great pilot for what the future of international education might look like, you know, post COVID world hopefully.”

Mr Hill pointed out that international education makes up about $37 billion annually to the Australian economy.

“Just to put that into context, the gross state product of the NT is between $26 and $27 billion dollars. So, the export dollars we earned from international education are about the size of the Northern Territory,” he said.

Deloitte also expects to see steady employment and improvement in the unemployment rates over the course of the year in the NT, but Mr Hill said that things will be tough at first.

The economist also cited strong housing construction in the NT over the last six months as a massive positive for the economy.

“We’ve seen really strong growth in housing construction over the last six months and that’s been buoyed by government grants, low interest rates and really strong demand,” he said. “So, housing in the NT has actually really gone from strength to strength, which is really positive.”

In the Deloitte Access Economics’ report published on Monday, the NT’s economic growth in 2021 is projected to increase 3.2 per cent; while Victoria is forecasted to be the fastest growing economy at 5.3 per cent; Queensland at 4.6 per cent; NSW at 4.4 per cent and the ACT to be the slowest at 2.4 per cent.

“The Northern Territory opened up fast because it could – it flattened COVID with a mallet,” the report stated. “But COVID hit when the economy was already weak, so a return of large infrastructure projects (such as Sun Cable and developing the Beetaloo Basin or other potential projects) may be needed before sluggish population growth finally revives.”

The report concluded the government would have to provide “support” in some form to help attract the still elusive private investment.

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