Statistics suggest that Sydney may be holding up the entire Australian economy once again, after contributing approximately 40% of the country’s growth during the last financial year. In 2013-2014, the economy of greater Sydney experienced an expansion of 4.3%, its fastest rate of growth in fourteen years according to a report on the economic performance of Australian cities.
The financial sector of the city, including insurance firms and banks, provided the most substantial contribution, followed closely by manufacturing, then professional services, real estate services, and construction. Overall, the annual output for the capital city reached an impressive $353 billion; equaling around 23% of Australia’s complete GDP.
The Benefits of Sydney’s Strength
The report, conducted by a consultancy company called SGS Economics, suggested that the growth in Sydney was strong enough to prompt the hypothetical bank of Sydney to offer interest rates a percentage point higher than their current official rate of 2.5%. However, the same report suggested that hypothetical reserve banks throughout Brisbane, Melbourne, Perth, Hobart, and Adelaide would all experience interest rates lower than the official one.
For most of the last decade, Sydney’s economy has been underperforming. However, as the impact of the beneficial mining boom begins to fade away, the city has emerged as an essential point for national growth. This role is nothing new to Sydney, who played the same part during the 1990s. Statistics suggest that Sydney’s contribution of 37.9% to the GDP growth of Australia during 2013-14, equals more than the combined contributions of Perth, Brisbane, Melbourne, Hobart, and Adelaide.
The Disadvantages of Sydney’s Wealth & Prosperity
This seems like something Australia should want to fix. Why would you want that much wealth and economic activity tied up in one place? Japan with Tokyo, Mexico with Mexico City, and Korea with Seoul all have the same issue. This is not ideal for a country that wants to be strong. There is a lot of risk for any country that has this much wealth and importance in such close proximity to each other and all tied up in such a confined geographic region.
The Future for Sydney
Although it is fair to say that challenges still lay ahead for Sydney’s economy, the city appears to have made a significant leap forward, with a growth rate twice as high as any other state capital. The growth was still lower than the rate of expansion throughout the Northern Territory and Western Australia. However, economists are conscious that these areas are still experiencing the boost from mining activity.
The committee chief executive for Sydney, Mr. Tim Williams, announced that the recent reports on growth within the area have served to underline the importance of Sydney. He said that the numbers underscore the crucial part that Sydney has been playing in supporting the national economy. Now, he feels that the next step is to ensure that the city receives a fair share of infrastructure investment, in regards to public transport, so that Sydney can maintain its title as an economic savior for the nation.
Other people disagree. How about investing in other Australian cities so the wealth and economic might is not so concentrated?
In the meantime, the economic performance of other areas have shown a stark contrast to Sydney’s success. Regional NSW’s growth contracted by 3.5% in 2013-14, and the second largest city in Australia, Melbourne, grew only 1.8%, the lowest rate it has seen since 2000-01.