The Northern Territory’s State Final Demand declined by 0.5 per cent in the June quarter, which could signal that the local economy is in a technical recession, economists say.

The jurisdiction’s SFD—the measure of public and private sector spending on various goods such as food, fuel, equipment, investments and property renovations, among others—suffered its second decline in the past three quarters, latest figures from the Australian Bureau of Statistics show.

A technical recession occurs when there have been two consecutive quarters of negative growth in the real gross domestic product (GDP), in this case, a declining SFP.

Western Australia ranked as the second worse performing economy with a mere 0.1 per cent increase in SFD, followed by Tasmania with a 0.6 per cent growth. Queensland and Western Australia, meanwhile, increased by 1 per cent, South Australia by 1.5 per cent and New South Wales by 1.9 per cent.

The Territory’s economy has been performing poorly even before economic activity was impeded by the COVID-19 pandemic in 2020.

The SFD’s weakening was led by a 6.2 per cent fall in NT and federal government expenditure, which in turn is caused by a 10 per cent drop in Territory and local government expenditure brought about by a cut in COVID-19 expenditure.

ABS statistics also show that a huge 70.7 per cent boost in interstate and overseas travel supported a 1.4 per cent increase in household consumption with hotels, cafes and restaurants securing a 9.1 per cent post-COVID boost, with increasing fuel prices contributing to a 9.6 per cent rise in vehicle operations.

Figures also indicate that private gross fixed capital investment rose 5.2 per cent brought about by a 5.5 per cent rise in non-dwelling construction on the back of new engineering work and a 14.5 per cent increase in home renovations.

The positive growth figures were however offset by a 7.4 drop in machinery and equipment due to a slowdown in the mining sector expenditure.

Public gross fixed capital investment, meanwhile, went up by 4.3 per cent boosted by a 34.6 per cent increase in utility investment.

NT economy still on track, Treasurer claims

Treasurer Eva Lawler maintained that the Territory’s economy is still on track to grow to an estimated $40 billion by 2030.

“Private investment is key to the Territory achieving a $40 billion economy by 2030,” Ms Lawler said, adding that the Territory’s SFD increased year-on-year by 8.2 per cent to $27bn, “the highest of any jurisdiction”.

In March, the NT recorded a 2.2 per cent increase in SFD, following a 1.7 per cent decline in the December quarter of 2021. These results mean that the Territory’s annualised SFD for 2021-22 was four per cent, just short of the 4.3 per cent budget forecast.

The government forecasts SFD increasing by 5.4 per cent in the 2022-23 Budget.

Ms Lawler pointed out that household consumption, up 1.4 per cent; private investment, up 5.2 per cent; and public investment, which also rose by 4.2 per cent were key elements of the SFD that had all reported increases.

In the fiscal year 2020-21, the Territory’s economy decreased by 0.6 per cent to $26.2 billion. The Territory’s SFD went up by 6.1 per cent to $25.0 billion, driven by increases in both consumption and investment. Net exports, however, decreased by 7.2 per cent to $9.9 billion.