Slowed manufacturing affects state economy

Victoria’s economy reported the slowest growth rates, due to the recent slowdown in the manufacturing sector, when compared to other mainland states. 

Official figures reveal Victoria's economic output grew at just half the rate of counterpart New South Wales in the year to June reported news.com.au.

The national economy chalked up its 21st year of growth and indicated Victoria's growth of only 1.7 per cent.

The state's economy contracted 0.3 per cent in the three months to June, compared with the previous quarter.

Latest national accounts, released yesterday revealed Australia's gross domestic product grew 3.7 per cent in the year to June.

Nationally, the economy grew 0.6 per cent in the June quarter compared with the previous quarter, when the growth rate was 1.4 per cent.

The Australian dollar fell 0.3 per cent to drop below $1.02 for the first time in six weeks.

Macquarie Bank chief economist Brian Redican said “it was the calm before the storm, with the impact of the slump in commodity prices a key concern.”

According to most economists, the Reserve Bank will have to cut interest rates next month or in November to boost growth as the global slowdown intensifies.

CommSec chief economist Craig James said “one of the biggest surprises in the national accounts was the variation in performance across states and territories.”

Western Australia's output expanded almost 16 per cent in the year to June, while Tasmania's contracted 2.2 per cent.

Victoria, the nation's manufacturing heartland, has slowed as the high dollar weighs on the value of exports and reduces the cost of imports.

"Growth rates in the resource states and territories are soaring whereas the manufacturing states are struggling," James added.