By Adam Coleman

A key economic forecast released today has suggested that while ‘sunbelt’ states might lead the pack now, the combination of a commodity price collapse and a recession will act as a "great leveller", affecting WA, Queensland and the Northern Territory more than it will on NSW, Victoria, South Australia or Tasmania.

In its Business Outlook for December 2008, Access Economics predicts that by 2009-10 most regions in Australia will be travelling at a similiar pace.

The forecaster paints a grim picture for NSW, suggesting the state is “drowning, not waving with its economy contracting at US-style rates”. The forecaster said 2009 will be a long year for NSW, yet lower interest and exchange rates mean the necessary elements for an eventual economic revival are in place.

Victoria it says is “taking its pain early”, with manufacturing the ground zero of its slowdown, and finance and business services also in “big trouble”.

The forecaster predicted the state could recover in 2010-11 due to low interest rates and as “the commodity price collapse comes back to haunt growth in the ‘sunbelt’ States”.

Queensland may be in the unusual position of shrinking as a share of Australia’s economy for a few years. The forecaster suggested that a fall in commodity prices in late 2008 is likely to “leave the State’s economy stuck in the slow lane for longer”.

Momentum from the resource boom, could drive Western Australia to a new peak as a share of Australia’s economy in 2010 the forecaster predicts, but the State’s “fortunes will fade thereafter”, with mid-2011 forecast to be the trough of the coming State recession.

The forecaster suggests "the fuse of an eventual slowdown in Australia’s north has been lit" with the Northern Territory to be one of the larger losers from the recent turmoil.

For South Australia the predictions were a little more optimistic with the forecaster predicting there would be no boom, but no bust. The Outlook said “the news for South Australia’s economy may be bad, the news is worse elsewhere in Australia”.

It predicted that South Australia’s share of Australia’s economy would climb “more notably and sustainably in the next few years than it has done at any time since the 1960s”.

The new was also better for Tasmania, with Access Economics suggesting the state’s economy is “travelling well and still generating good job growth, having survived the
phase of high interest rates”.

Tasmania hence is enjoying the fastest current growth of any of the States outside the sunbelt, it said.

The good news for the ACT is that recessions always hit the private sector harder than the public sector according to the forecast.

It said falls in interest rates play to the ACT’s mortgage belt strengths, and that the ACT has been a significant beneficiary of Federal spending to halt the slowdown.