South Australian economy likely to face challenges in near-term, aided by weak AUD

The South Australian economy is expected to face challenges in the year ahead, but should be aided by the low-interest rate environment and by the weaker Australian dollar.

In 2014-15, the South Australian economy grew by 1.6 percent.  It is expected to have grown 1.5 percent in 2015-16. The outlook for 2016-17 is for a continued modest growth of around 1.25 percent. The closure of the car industry in the region is indicative of a subdued manufacturing, to be partially offset by defense manufacturing in the State.

Further, a weaker AUD has lifted the competitiveness of the manufacturing sector, as well as agriculture, tourism and international education. Housing prices in Adelaide have grown only modestly through the year to September. House prices are up 2.7 percent for the year to September 2016, while unit prices slipped 0.2 percent, data released by CoreLogic showed.

In addition, business investment in South Australia has been lacklustre in recent years. The size of the declines in business investment in South Australia has, however, been less dramatic than in some of the resource States.

Meanwhile, the labor market in South Australia has picked up over the year. Employment rose by 1.8 percent in the year to September 2016. This is above growth in employment nationally of 1.4 percent over the same period.