Overall results

How are Australia’s states and territories performing?

• Each quarter CommSec attempts to find out which state or territory is Australia’s economic leader. Now in its 16^th year, the report also includes a section comparing annual growth rates for the eight key indicators across the states and territories as well as Australia as a whole, enabling comparisons in terms of economic momentum.
• Overall, the economic performances of Australian states and territories are being supported by a strong job market, robust government spending and solid population growth at a time of higher-than-desired cost-of-living pressures. But economic growth has slowed, with consumers squeezed by elevated mortgage costs. The future path will depend on the resiliency of the job market, expected interest rate cuts, the federal election outcome and China’s demand for commodities in the face of rising US import tariffs.
• Western Australia leads the national performance rankings for the third successive report. The state is ranked first on five of the eight economic indicators.
• In a closely fought contest, Victoria jumps up to second place from fourth spot. Queensland slips from second to third spot, just ahead of South Australia now in fourth, also dropping from equal second spot.
• Tasmania is steady in fifth place but is joined by NSW, which lifts from sixth spot. The ACT remains seventh.
• The Northern Territory stays in eighth spot. We acknowledge that the economic performance ranking criteria disadvantages this small, open economy. As a result, we highlight the annual growth rankings—a measure of economic momentum.
• Measuring annual growth rates of the eight economic indicators Western Australia replaces Queensland in first spot, which slips back to second. Victoria remains third and South Australia stays fourth. The Northern Territory remains fifth ahead of NSW in sixth and Tasmania in seventh. The ACT slips to eighth spot.

Analysis

Where to from here?

• Last quarter (January 2025, Edition 62) we noted that Western Australia and Queensland were expected to continue their recent domination of the rankings in early 2025. While Western Australia tightened its grip atop the national economic leaderboard, both Queensland and South Australia slipped back from joint second to third and fourth places, respectively, losing some momentum. The pace of gains in the states home prices are slowing following a strong post-pandemic upswing.
• Victoria is the biggest surprise, jumping from fourth to second spot. The southern state continues to benefit from solid retail spending and inbound overseas migration.
• Looking ahead, an expected reduction in interest rates could boost economic sentiment in the mortgage-sensitive states of NSW and Victoria. Federal election uncertainties and a potential public service downsize pose a downside risk to the ACT economy. The escalating US-China trade war could dampen growth in Western Australia, Queensland and the Northern Territory due to their reliance on Chinese demand for commodity exports.

Methodology

• Each of the state and territory economies were assessed on eight key indicators: economic growth; retail spending; equipment investment; unemployment, construction work done; population growth; housing finance and dwelling commencements.
• The aim is to find how each economy is performing compared with ‘normal’. Similar to what the Reserve Bank of Australia (RBA) does with interest rates, we used decade averages to judge the ‘normal’ state of affairs. For each economy, the latest level of the indicator—such as retail spending or economic growth—was compared with the decade average.
• While we also looked at the current pace of growth to assess economic momentum, it may yield perverse results to judge performance. For instance, retail spending may be up sharply on a year ago but from depressed levels. Overall spending may still be well below ‘normal’.
• And clearly some states, such as Queensland and Western Australia, traditionally have had faster economic growth rates due to historically faster population growth. So the best way to assess economic performance is to look at each indicator in relation to what would be considered ‘normal’ for that state or territory.
• For instance, the trend jobless rates in South Australia and Tasmania both stood at 3.9 per cent in March 2025. But the Tasmanian unemployment rate was 28.8 per cent below its decade average of 5.5 per cent, while the South Australian jobless rate of 3.9 per cent was 31.0 per cent below its decade average of 5.7 per cent. So South Australia ranks above Tasmania on this indicator.
• Seasonally adjusted or trend measures of the economic indicators were used to assess performance on all measures. The preference was for the less volatile trend measures. Original data is used to assess population growth.
• We now measure economic growth using real state demand plus real net trade in goods and services in seasonally adjusted terms. While the data only extends back four years, the results can be consistently compared for all economies in real terms.

Read the report.