LEADING Australian economist Saul Eslake apologised to Launceston business people yesterday for stating the Tasmanian economy as it is - in recession.
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``It doesn't give me any pleasure to speculate . . . that Tasmania might have been in recession,'' Mr Eslake said.
But Mr Eslake had the statistical information to prove the speculation correct.
He told a large gathering at a Launceston Chamber of Commerce business lunch that there was a popular rule of thumb that economies were in recession when they experienced two or more consecutive quarters of negative growth in real gross domestic product.
Tasmania's sum of spending by households, businesses and governments in the latest Australian Bureau of Statistics figures revealed that the state recorded consecutive quarters of negative growth for the second time in the past 18 months.
``And over the year to March 2012, state final demand (or the spending by households, businesses and governments) actually contracted while it increased by a bit over 4 per cent on the mainland,'' Mr Eslake said.
A more meaningful way to gauge whether a state economy was in recession was the increase in the rate of unemployment, Mr Eslake said.
The gauge was whether the unemployment rate had increased by 1 1/2 per cent or more in 18 months or less, he said.
``If we look at those figures in Tasmania then between mid-2011 and earlier this year the trend unemployment rate rise was by 2 per cent,'' he said.
``It was from about 5.2 per cent to a peak of almost 7.5 per cent, slightly over 2 per cent. Tasmania finds itself in this state because it has a below average proportion of the sectors that other states have used to pull out of recession.
``It has a much smaller mining sector than any state except Victoria.
``It doesn't get much benefit from construction, when the only area where construction is doing well as the moment is in engineering construction, given that residential and non-residential building construction is in the doldrums.''
Tasmania also has a larger part of its economy in areas that are adversely affected by the side effects of the resources boom, such as manufacturing, tourism and retailing, he said.
Mr Eslake urged the state to look towards educating and upskilling its workforce.
``A fundamental rethink of Tasmania's economic model is overdue,'' he said. ``There is a need to place greater emphasis on the production of highly differentiated goods and services embodying a higher intellectual content and which can be sold at high prices.''
