On 2 March 2022 the Australian Bureau of Statistics (ABS) published the December quarter 2021 Australian National Accounts: National Income, Expenditure and Product (Cat. No. 5206), which means we can update the Practical Economics quarterly Australian State and Territory Gross State Product (GSP) series.
The ABS does not publish quarterly state and territory GSP.
The Practical Economics quarterly GSP method involves benchmarking quarterly industry indicators to annual industry GSP, creating quarterly industry value-added, and then aggregating the results. For a full description of the method see here.
At this stage our quarterly industry indicators are simply national quarterly industry value-added, which are adjusted by annual state and territory GSP.
We always encourage you to read our disclaimers here and here.
Anyway, to a quick tour of the results. Here are the December quarter 2021 quarterly and annual Practical Economics GSP results.
National Gross Domestic Product (GDP) increased by 4.3% in the December quarter 2021, which flowed through to all States and Territories.
All states and territories experienced strong economic growth between the September and December quarters 2021, as well as December 2021 over December 2020.
December Quarter 2021 Practical Economics Gross State Product, Percentage Changes, Chain Volume Data
Turning to our usual chart of all states and territories economic (GSP) growth, it’s tough to pick any major revisions so we won’t try. The most prominent part of each chart remains the COVID-lockdown driven contraction in the middle of 2020.
Economic activity rebounded in the December quarter 2021 compared to a contraction in economic activity in the September quarter 2021.
Quarterly State and Territory GSP Growth September 2002 to December 2021 Chain Volume, 2019-20 Prices, Seasonally Adjusted
The national output gap in the December quarter 2021 was only 0.07 percentage points, which means the Australian economy has returned to its pre-COVID growth trajectory, although the missing production and income between the March quarter 2020 and the September quarter 2021 may or may not be ever recovered.
Quarterly State and Territory GSP Output Gap, Chain Volume, 2019-20 Prices
There are important regional differences in outputs gaps across the states and territories, which indicate the impact of COVID-19 restrictions have not yet finished.
The smaller states and territories – South Australia, Western Australia, Tasmania and the Northern Territory – are all above their trend GSP. Other than Victoria, the remaining regions are close to returning to trend output.
December Quarter 2021 Output Gap, Percentage Gap, Chain Volume Data (positive gap means output below trend)
However, Victoria remains the economic laggard in the country. It has an important services/events sector, and has endured the longest and most stringent COVID-19 related lockdowns in the country. Consequently it has endured the most economic pain.
Therefore it is pleasing to see Victoria’s economy growing by almost four percent in the December quarter 2020. However, it still has some distance to recover from its peak output gap of 8.9 percentage points in the June quarter 2020.
Output Gap, New South Wales and Victoria, Percentage Point Gap, Chain Volume Data (positive gap means output below trend)
It is worth noting, however, that New South Wales had a similar peak output gap in the June quarter 2020, but has now returned to trend.
There’s a discussion about costs and benefits of COVID-19 restrictions in the differences between New South Wales and Victoria, but we don’t have time for that now.
The next update to our series will flow from the ABS National Income, Expenditure and Product release on 1 June 2022, which will include national industry and demand data for the March quarter 2022, and hence indicators for our series.
We’ll get to it as soon as possible after 1 June.
If you have any comments, suggestions or want to purchase full results then please contact us. This isn’t our full-time job and we generate Practical Economics content when we can, so we might not reply immediately, but we will get back to you.
Alternatively sign up for our newsletter below for more great content.