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SA economy "at the crossroads": BankSA report

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South Australia is a state at the crossroads says the latest edition of BankSA’s economic bulletin, Trends.

Released today, the bulletin 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, Trends examines Australian living standards, South Australia’s housing sector and prospects for the State’s rural sector.

South Australia’s employment levels are decreasing, and the state’s population and output growth is falling below the national average, it says.

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 Holden’s decision to cease manufacturing, including:

BankSA Chief Executive Nick Reade told guests at today’s release of the bulletin that the impact may be exaggerated.

“Naturally, the announcement by Holden that it would no longer manufacture in Australia past 2017 was a blow,” Reade said.

“As Trends reports, Holden’s role as a car manufacturer based in Adelaide has been one of the jewels in the crown of this state’s economy for more than half a century.

“Holden’s announcement has led to numerous questions and, with the more recent announcement that Toyota will also follow suit with ceasing its manufacturing in 2017, concerns have been further exacerbated. As with any step into the unknown, there’s a lot of uncertainty – and in some cases fears – as to what lies ahead.”

The reports suggests the answers are likely to range somewhere between a best case, where the only jobs lost are those already announced by Holden, Ford and Toyota as going, adding to around 7,000 jobs nationally and 2,000 jobs in South Australia, and worst case, where wider losses within the auto sector are realised and flow on effects to other industries swell these losses up to around 70,000 jobs nationally and 9,000 jobs in this State.

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 are easy to exaggerate.

“The car industry is just one part of a broader South Australian economy, and it is important not to forget the good news for jobs wrapped up in the downshift in the Australian dollar and interest rates in recent years,” the report says.

“In the midst of headline grabbing ‘horror stories’, we forget there are still many success stories, both small and large.”

 

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