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The volume of goods and services produced in Australia (measured by GDP) is a major influence on material living standards. The average annual growth rate in real per capita GDP between 1990-91 and 2000-01 (2.4%) was appreciably above the average recorded since the early 1960s. Moreover, the past nine years or so represent the longest run of growth observed during the past thirty years.(SEE FOOTNOTE 1)
STATE AND TERRITORY OUTPUT
Gross State Product (GSP) is the total value of goods and services produced in a State or Territory, after deducting the cost of goods and services used up in the process of production. The sum of the eight GSPs is equal to Australian GDP.
Although GSP is a major influence on the material living standards of residents in a State or Territory, there are other influences such as Commonwealth government taxes and expenditures, and incomes transferred to or from other States or Territories and the rest of the world.
Real gross domestic product(a) per capita
Real gross state product(a) per capita, average annual growth rates - 1990-91 to 2000-01
Source: Australian National Accounts: State Accounts.(SEE FOOTNOTE 2)
During the past decade, although there have been some shifts in the relative economic positions of some States and Territories, there has been a fairly persistent pattern. GSP per capita was above the national average throughout the period 1990-91 to 2000-01 in New South Wales, Victoria, Western Australia, the Northern Territory and the Australian Capital Territory, and below the national average in the other States.(SEE FOOTNOTE 2)
Industry gross value added (IGVA) is the total value of goods and services produced by an industry, after deducting the cost of goods and services used up in the process of production.
During the past decade, different industries have exhibited substantially different rates of real output growth. Among the industries showing strongest growth in real IGVA between 1990-91 and 2000-01 were Communication services and Property and business services.
Real industry gross value added(a), average annual growth rates - 1990-91 to 2000-01
Source: Australian System of National Accounts.(SEE FOOTNOTE 1)
EFFECT OF CHANGES IN WORLD PRICES - TERMS OF TRADE
In recent years, Australia's terms of trade have shown fairly wide oscillations, but overall between 1990-91 and 2000-01 there was a modest improvement. Changes in our terms of trade have reflected changes in both the prices and the composition of traded goods and services.
Imports give the residents of a country access to goods and services that cannot be produced (or cannot be produced as cheaply) in the domestic economy. Exports are one important way of funding purchases of imports and of maintaining levels of domestic production, income and employment.
The goods and services that make up a country's exports are typically quite different from those that make up its imports - for example, agricultural and mining products accounts for a fairly large proportion of Australia's exports, whereas manufactured goods and some services account for a large proportion of our imports. Thus, changes in the terms of trade can affect the volume of goods and services that must be exported to fund a given volume of imports.
During much of the twentieth century, there has been a general trend toward falling prices of primary commodities (especially agricultural products) relative to other traded goods and services. This reflects both shifts in the composition of worldwide demand and supply, and the effect of improvements in productivity. Around that long-term trend, however, there have been oscillations (each lasting several years) that have reflected short-to-medium run changes in demand and supply conditions.
Between 1990-91 and 1993-94, there was almost a 10% deterioration in Australia's terms of trade, reflecting falling export prices and strongly rising import prices. The terms of trade had improved by 1997-98 (returning to just under their 1990-91 level), then again deteriorated 5% in 1998-99, owing largely to fluctuations in import prices. Rising export prices thereafter brought the terms of trade in 2000-01 back to a little above their level of a decade earlier.(SEE FOOTNOTE 3)
Population in work(a)
Australia's terms of trade(a)
1 Unless otherwise indicated, all data in this commentary are derived from Australian Bureau of Statistics 2001, Australian System of National Accounts 2000-01, Cat. no. 5204.0, ABS, Canberra.
2 Australian Bureau of Statistics, various issues, Labour Force Australia, Cat. no. 6203.0, ABS, Canberra.
3 Australian Bureau of Statistics 2001, Australian National Accounts: State Accounts 2000-01, Cat. no. 5220.0, ABS, Canberra.