Omari Gates
As of 2021, Tasmania was considered the best-performing economy in Australia, topping the Commonwealth Securities' state of states report for the fifth quarter in a row. However, more recently, in 2025, Western Australia has been hailed as the state with the strongest economy, leading on five of eight economic indicators, including retail spending, unemployment, population growth, housing finance, and dwelling starts. Queensland has also been noted as a rising economy, climbing to second place in 2025.
| Characteristics | Values |
|---|---|
| Strongest Economy | Western Australia |
| Second Strongest Economy | Queensland |
| Third Strongest Economy | South Australia |
| Fourth Strongest Economy | Victoria |
| Fifth Strongest Economy | Tasmania |
| Sixth Strongest Economy | New South Wales |
| Seventh Strongest Economy | Australian Capital Territory |
| Eighth Strongest Economy | Northern Territory |
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What You'll Learn
Tasmania's economic growth
Tasmania has experienced strong economic growth, with a particular focus on its fresh produce industry and tourism sector. In 2021, Tasmania topped the Commonwealth Securities' state of states report for the fifth consecutive quarter as Australia's best-performing economy. This ranking was based on eight economic indicators, including economic growth, retail spending, and unemployment. Tasmania's agricultural economy, particularly its fresh produce industry, plays a vital role in its economic performance.
The state also has a sizeable tourism sector, which significantly contributes to its economy. In the year ending September 2016, Tasmania welcomed 1.19 million visitors, reflecting a 4% increase from the previous year. The total number of nights spent by visitors in the state increased by 8% to 10.58 million.
Tasmania's exports also contribute significantly to its economic growth. In 2015-2016, its top export category was processed metals and metal products, generating $AUD 1.216 billion in sales. Other key export categories included ores and concentrates, meat products, seafood products, and dairy products. The state has a positive trade balance, with exports more than doubling imports.
In terms of employment, Tasmania has a strong labour force with high employment and low unemployment rates. The state's energy supply industry is also fundamental to its economy, providing employment opportunities and contributing to the state budget through taxes and dividends.
Looking at more recent data, Tasmania's economy performed strongly in the first quarter of 2022-23, recording the second-highest growth in SFD (state final demand) among all Australian states and territories. This growth was driven by increases in government consumption, public investment, and high employment rates. However, the final two quarters of 2022-23 are expected to show more subdued growth due to higher interest rates and moderating global economic conditions impacting household spending and private investment decisions.
Overall, Tasmania's economic growth has been notable, with the state demonstrating resilience and strong performance across various sectors, including agriculture, tourism, exports, and energy.
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Queensland's economic momentum
Queensland has the strongest economic momentum in Australia. Overall, Australian state economies have demonstrated resilience, and Queensland's diverse economy has helped generate growth rates that have mostly exceeded those in advanced economies over the past two decades. Queensland's economic growth has generally exceeded the national average, reflecting a range of factors and trends, including strong population growth, the resources investment boom, and an associated upturn in LNG exports. Queensland's largest industry in 2023-24 was mining, valued at A$61.6 billion in nominal gross value added (GVA) terms (12.9% of Queensland’s total GVA). Queensland's second-largest industry is tourism, contributing $15.7 billion in GVA in 2023-24, and providing 156,000 direct jobs. The construction sector is the third-largest employer in the state, with 278,600 people employed in the industry in 2023-24, contributing $37.6 billion (7.9% of total output) to Queensland’s economy. Queensland has also diversified its economy with horticulture, with farms around the coastal town of Bowen producing Australia's largest winter crop of vegetables, as well as bananas, cotton, and citrus crops.
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Victoria's construction work
As of 2025, Western Australia has the strongest economy in Australia, with Queensland in second place. Victoria, which has shown improvement in economic momentum, has maintained its fourth-place ranking and topped the construction work indicator.
The City of Victoria provides an online mapping tool called VicMap, which displays current large-scale construction projects. The city also offers traffic advisories on various platforms to provide up-to-date information on planned traffic disruptions. These tools help residents and visitors navigate construction zones and plan their journeys accordingly.
Victoria's focus on construction and infrastructure development demonstrates its commitment to creating a safe and efficient environment for its citizens and supporting the state's overall economic growth. The state's performance in construction work has contributed to its ranking in the Australian economy.
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Western Australia's retail spending
Western Australia has the strongest economy in the country, leading on five of eight economic indicators, including retail spending. This is the second time in a decade that Western Australia has claimed the top spot.
Despite the overall slowdown, Western Australia's retail spending remained steady, with a 0.8% increase in monthly turnover. This was the second-highest increase among all states and territories, indicating continued strong retail spending in the state.
Looking at the broader picture, Western Australia's strong economy is driven by various factors, including mining and homebuilding. The state has shown improvement in dwelling stats, unemployment, housing finance, and relative economic growth. These factors have contributed to its overall economic performance and resilience, despite challenges such as higher interest rates and inflation.
In conclusion, Western Australia's retail spending has been a key contributor to its position as the country's strongest economy. The state's consistent performance across multiple indicators, including retail, unemployment, and population growth, highlights its economic resilience and momentum. As a result, Western Australia has claimed the top spot in the economic rankings for two consecutive quarters.
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South Australia's economic growth
Western Australia has consistently been ranked as the Australian state with the strongest economy, with Queensland and Tasmania also performing well. However, South Australia has demonstrated significant economic growth and resilience, sharing second place with Queensland in some rankings.
South Australia's economy has historically been dependent on a narrow rural base, with a focus on mining, agriculture, and tourism. The development of mining at Broken Hill in the 1880s generated new economic activity in the state. However, South Australia's economic growth rate lagged behind other parts of the continent for many decades. Poor economic growth in the early 20th century, coupled with worsening budget deficits, migration, and severe drought, posed significant challenges for the state.
During the Great Depression of the 1930s, South Australia experienced high unemployment rates and a decline in industrial growth. The state government intervened to support vulnerable industries, laying the groundwork for accelerated industrialization in the Adelaide region during World War II. Heavy industries and munitions factories emerged, and the growth of war-related industries translated into broader industrialization post-war. The state adopted a vigorous immigration program, and Premier Thomas Playford promoted South Australia's business prospects, emphasizing lower costs of living and doing business.
In recent years, South Australia has faced economic challenges, with a decline in manufacturing and a shift towards service activities. However, the state government has implemented initiatives to support economic growth, including the South Australian Productivity Commission's recommendations for improving policy evaluation capabilities. Additionally, South Australia was the first jurisdiction to integrate state datasets with data from the Australian Bureau of Statistics, enhancing their understanding of employment and industry performance and enabling the development of stronger economic policies.
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Frequently asked questions
Tasmania has been Australia's best-performing economy for five consecutive quarters as of April 2021. Western Australia has also been a top-performing state, ranking first in April 2025.
The Northern Territory has consistently been in eighth place, indicating that it has the weakest economy among the Australian states.
Queensland has claimed first place for economic momentum, with Western Australia close behind in second position.
Economists analyse eight indicators to determine the strength of an Australian state's economy: economic growth, retail spending, equipment investment, unemployment, construction work, population growth, housing finance, and dwelling commencements.
