About our economy in NSW
NSW has the largest state economy in Australia, worth nearly $700 billion. It makes up about a third of the country’s economy and is home to about a third of Australians.
Natural disasters, COVID-19, and lockdowns have had a big impact on economic activity. For the first time ever, the NSW economy, measured by Gross State Product (GSP), decreased in 2019-20. It recovered growing 3.8% above pre-COVID-19 levels by 2021-22. This growth continued with our state final demand (SFD) increasing by 0.7%. This was the second strongest state result.
Our population is now 8.2 million and has grown by an average of 1.1% each year over the last 30 years. The population growth in NSW was faster than usual in the 7 years before the pandemic, mostly because of overseas migration. When our borders closed during COVID-19, we saw a drop in overseas migration for the first time since 2000, which slowed population growth. Since late 2021, with borders reopening, overseas migration has increased again.
We have a service-driven economy with less dependence on commodity prices compared to the mining states of WA and QLD. Over the last 20 years, services have grown to make up 75% of our economy and over 90% of jobs.
Business services are a major strength in NSW, contributing about 30% of our GSP. This includes areas like:
- finance
- professional and technical services
- real estate
- media
- telecommunications
- support services.
Construction and healthcare are also key industries of the economy.
The biggest employers in NSW are:
- health
- social care
- professional and technical services
- retail
- construction
- education.
Together these industries make up more than half of the state’s jobs.
We have the largest workforce in Australia, with nearly 4.5 million people working or looking for work. In November 2022, about 67% of the population was in the workforce, the highest rate ever recorded. This was a strong recovery from the pandemic's impact in 2020 and 2021. More women have been joining the workforce over time, contributing to the recovery. By October 2022, the unemployment rate had dropped to 3%, the lowest since 1974.
We export a wide range of goods, natural resources, and services. NSW has been an importer of goods and an exporter of services. Key exports include:
- coal
- beef
- gold
- aluminum.
The main countries and jurisdictions we export our goods to are:
- Japan
- Taiwan
- South Korea.
Most of the imported goods come from:
- China
- United States
- South Korea.
Tourism and international education made up about half of our service exports before the pandemic. Travel restrictions during the pandemic greatly reduced these exports, dropping them to about a quarter of the state's total service exports. Tourism was hit the hardest, with a 97% drop in exports from 2019-20 to 2020-21. Now that borders are open, there has been a rise in overseas visitors through October 2022, though numbers are still below pre-pandemic levels.
Our population sits at 8.2 million and has grown by an average of 1.1% each year.
90% of jobs in NSW are in the service industry.
Our economic performance and outlook
Our 2024-2025 Budget Statement delivers information on the finances and economic outlook of NSW, the aim is to inform the people of NSW of our financial position and our overall economic strategy.
- The outlook for the NSW economy is for a continued gradual easing in inflation without a significant deterioration in the labour market. This is broadly consistent with expectations at the time of the 2024-25 Budget.
- Economic growth is likely to remain subdued in the near term. Momentum in economic activity is anticipated to recover over the course of 2024-25 as cost-of-living pressures ease.
- Inflation has continued to ease as expected over the past six months, despite elevated services inflation, while the labour market has remained resilient.
- Stronger-than-expected annual growth in state final demand in 2023-24 concealed a more pronounced slow-down towards the end of the financial year. This recent slowdown will weigh on forecast annual growth in 2024-25.
- Risks to the outlook are currently centered on geopolitical tensions, possible US-China trade issues, and the potential that persistent inflation pressures could impact growth.
A more detailed economic outlook can be found in Chapter 2 of the 2024-25 NSW Half-Yearly Review.
NSW economic performance and outlook (a)
| 2023-24 | 2024-25 | 2025-26 | 2026-27 | 2027-28 | |
|---|---|---|---|---|---|
| Outcome | Forecast | Forecast | Forecast | Forecast | |
| Real state final demand | 1.5 | ¾ (1¼) | 2¼ | 2¼ (2½) | 2½ |
| Real gross state product | 1.2 | ¾ (2) | 2½ (2) | 2¼ | 2¼ |
| Employment | 2.1 | 2(1) | 1½ (1) | 1½ | 1½ |
| Unemployment rate(b) | 3.9 | 4½ | 4½ | 4¼ | 4 |
| Sydney consumer price index | 4.3 | 3 | 3 (2¾) | 2½ | 2½ |
| Wage price index | 4.1 | 3½ (3¾) | 3¼ (3½) | 3¼ | 3½ |
| Nominal gross state product | 5.3 | 3¼ (5¾) | 5¼ (4¾) | 4¼ (4½) | 4½ (4¼) |
| Population(c) | 1.7 | 1.3 (1.2) | 1.3 (1.2) | 1.2 (1.1) | 1.2 (1.1) |
(a) Forecasts are rounded to the nearest quarter point and are annual average per cent change, unless otherwise indicated. 2024-25 Budget forecasts in parenthesis where different. Forecasts completed prior to publication of the 2023-24 Annual State Accounts by the Australian Bureau of Statistics (ABS).
(b) June quarter, per cent.
(c) Per cent change through the year to 30 June and rounded to the nearest 0.1 percentage point. The assumptions for net overseas migration are consistent with assumptions in the 2024-25 Australian Government Budget
Source: Australian Bureau of Statistics (ABS) and NSW Treasury.
Our credit rating
The Moody’s Analytics (Aaa) and Fitch Ratings (AAA) for NSW have been reaffirmed and the S&P rating (AA+) maintained.
A credit rating is a measure of how risky a borrower is (the borrower’s expected willingness and capacity to repay any debt on time). Types of entities may include:
- an individual
- country
- state
- city
- company.
Ratings can change depending on the type of debt instrument (and its terms and conditions), as well as the borrower’s credit profile.
Higher credit ratings may lower the cost of borrowing and assist an entity in accessing financial markets.
For Government entities, the highest possible ratings are Aaa (Moody’s), AAA (S&P) and AAA (Fitch). The lowest are C (Moody’s), D (S&P) and D (Fitch).
Contact NSW Treasury
For general or media enquiries, complete our online form or visit our Contact us page.
- Address: 52 Martin Place, Sydney, NSW 2000 (Enter via 127 Phillip Street)
- Post: GPO Box 5469, Sydney, NSW 2001