Tasmania will not necessarily beat the mainland out of the coronavirus economic crash simply because it was doing relatively well before the crisis.
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That is according to economist Saul Eslake, who said he doubted Tasmania's economy would emerge more quickly than the rest of the country.
He said that was partly because the state was being more cautious about lifting restrictions than most other states.
Mr Eslake said he was not being critical of that.
Migration was another factor in his caution about Tasmania leading the way on economic recovery.
" ... our stronger performance over the two or three years prior to the COVID-19 outbreak owed a fair bit to a pick-up in overseas migration - which won't be returning for a long time - and in interstate migration, which may also take a while to pick up," he said.
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"Of course, the reversal in population movements across Bass Strait was also a vote of confidence in Tasmania's prospects, both by mainlanders who wanted to come here and fewer locals feeling they had to leave, so there was causality running in both directions.
"But it's also a bit like saying that if two cars, one travelling at 100 km/h and the other at, say, 80 km/h, both come to a complete stop at the same time, it necessarily follows that the car which had been driven faster will necessarily take off faster, and that isn't true.
"It will probably require the state government to do more by way of stimulus relative to the size of Tasmania's economy than other states and territories for that to be a realistic prospect.
"And they might well do that, having been relatively more generous in providing support to households and businesses during the downturn than other states and territories have been."
Mr Eslake was speaking before Premier Peter Gutwein revealed details of a $3.1 billion construction package on Thursday.
Tasmanian state final demand - total spending by households, businesses and governments - increased by 0.6 per cent in the March quarter in seasonally adjusted terms, the Australian Bureau of Statistics estimated.
Mr Eslake expected a much worse result for the current quarter, which has featured most of the economic damage linked to the pandemic.
"Final demand will be down a lot - possibly more than 10 per cent - in the June quarter, but should turn positive in the September quarter, given that restrictions are being relaxed from mid-May onwards," Mr Eslake said.
He said Tasmania's March quarter state final demand growth was beaten only by Western Australia and the ACT, and the national figure was a decline of 0.5 per cent.
Tasmanian state final demand increased by 1.2 per cent since the March quarter of 2019, while the national figure was just 0.5 per cent.
Mr Eslake said the main reasons why Tasmania did much better than the national average during the March quarter were:
- new business investment rose by 6.7 per cent in Tasmania and declined by 0.8 per cent nationally;
- Tasmanian household consumption spending fell by 0.9 per cent while national spending fell by 1.1 per cent; and
- public sector spending increased by 1.2 per cent in Tasmania and by 0.2 per cent nationally.
The ABS on Wednesday said Australia's gross domestic product fell by 0.3 per cent in the March quarter.
It is certain to fall again in the current quarter due to the coronavirus crash, meaning the nation is in recession for the first time in 29 years.
A recession is two quarters (or more) of negative gross domestic product growth.
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