The construction of a building in Hobart town (Tasmania).

The Ugly Truth Behind Tasmania’s Booming Economy

When economists talk about economic growth, they generally refer to gross domestic product (GDP). This is supposed to reflect the total value of all goods and services produced within a nation or a state. And it does that reasonably well.

What it does not do well is reflect how that growth is achieved. Or even whether high GDP growth improves the wellbeing (incomes) of the average resident.

Most often in Australia, you’ll find that high economic growth is largely the result of rapid population growth. Yet despite a ballooning population over the past 10 years, Australia has seen virtually no wage growth in that time.

Then there’s Tasmania, a state that has been lagging behind its faster growing neighbours. Until now…

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High economic growth isn’t always a good thing

Tasmania’s economy recorded its fastest growth in a decade in 2017/18, according to Tasmanian Chamber of Commerce and Industry’s 2018 report.

As the AAP notes, this puts Tassie’s growth above the national average.

Prominent economist Saul Eslake released the 2018 report on Monday. It shows the state’s economy grew by 3.3% last financial year.

That sounds good.

But the report also notes that the state’s population grew at the fastest pace in nine years. This means adding more people is one of the key drivers of that growth. And it means that GDP per capita — how the average person’s wealth may have grown — is far lower than 3.3%.

Something to keep in mind when our pollies stand on their soapboxes and tout the high economic growth levels they’ve ushered in. The ugly truth is it’s almost always delivered with a new surge in population growth.

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Bernd Struben

Bernd Struben

Bernd Struben is the lead editor at The Australian Tribune. Bernd makes use of his extensive network to bring you the top stories you need to know about each day. Stories the mainstream may miss. Or bury somewhere you’re unlikely to ever read them. Bernd studied aerospace engineering and journalism at the University of Michigan, before graduating with a degree in economics. Over the past two decades he’s worked in media, management, and finance in the US, the Caribbean, Europe, and Australia. His other role, as the editor of the Port Phillip Insider, puts him in a unique position to read Australia’s most exclusive financial advice. Some of which he shares with readers of The Australian Tribune for free.
Comments: 2

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  1. It looks like that the pensioners are flocking to where cheeper housing, promised a house and some money in the pocket to live it up. What will Tassmanian economy look like in five to ten years, is not as good as is made to look like now.
    JL

  2. Tasmania had a mini boom in this way leading up to the GFC. Cheaper than mainland housing was the same reason then too. Nothing new. What else should be expected when foolhardy speculators created an issue in Melbourne and Sydney market.