BankSA Trends examines the realities
The latest edition of BankSA’s economic bulletin, Trends, paints the picture of a State at the crossroads.
The bulletin, released by Westpac CEO Gail Kelly and BankSA CEO Nick Reade last Friday (March 21), looks closely at ramifications of last year’s announcement by Holden that it will cease manufacturing in Australia by 2017.
Conducted in conjunction with Deloitte Access Economics, this edition also examines Australian living standards; South Australia’s housing sector and prospects for the State’s rural sector.
When it comes to living standards, the bulletin suggests developments in the boarder economy gave national incomes a boost in past years that may not still be there across the next decade. South Australia’s employment levels are falling, and the State’s population and output growth is falling below the national average.
In the rural sector, the BankSA Rural Price Index shows that a moderating Australian dollar is reducing one source of pressure on local farmers.
Sitting in the middle of these indicators is the local housing sector where news is broadly good across a range of leading gauges.
The bulletin’s main article tackles numerous questions relating to the Holden decision including:
- Will the move knock the economy notably off course?
- Will the loss of skilled jobs prove problematic for the prospects for SA workers?
- Are many of the fears overblown?
- Can we refine future economic opportunities?
It’s worth remembering that South Australians have been aware for a long time that there was a risk that Holden would no longer continue to make cars at its Elizabeth plant in Adelaide. This development is not ideal for the State’s economic outlook, but Trends asks, just how bad is it?
Trends concludes that although the loss of car manufacturing operations and associated jobs will be a blow to South Australia, the size of those challenges is easy to exaggerate.
Yes, there will be challenges for the State as it sheds manufacturing jobs through 2016 and 2017 and our economy is already softer than usual. But there is great potential for South Australia to capitalise on a number of developing opportunities over the next decade including overseas students; food and wine; resources; tourism and healthcare.
We must remember that, the car industry is just one part of a broader South Australian economy, and must not forget the good news for jobs wrapped up in the downshift in the Australian dollar and interest rates in recent years and identified opportunities in other sectors.
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