Melbourne is set to challenge Sydney as the Australian economy’s most important city, according to a new report from SGS Economics and Planning.
That report suggests that despite growing in unison for much of the past five years, Sydney and Melbourne diverged in 2018-19.
“Sydney’s GDP growth in 2018-19 has fallen below its ten-year average, while Melbourne’s growth continues to be well above the ten-year average,” the report reads.
In 2018-19, Melbourne accounted for 39.8 per cent of national growth, the largest contributor.
Despite this divergence, Sydney and Melbourne remain the drivers of the national economy, producing roughly 75 per cent of national GDP growth.
Transitioning from an economy heavily reliant on a declining manufacturing sector, Melbourne’s growth is attributed to accelerating construction, finance and health industries.
The report suggests the development of Southbank and Docklands provided Melbourne’s CBD with brownfield site to accomodate significant levels of new employment.
Additionally, road projects such as the Western Ring Road, CityLink and EastLink helped improve connectivity across the city, according to the report.
“These factors have produced agglomeration economies which enabled high-productivity firms to flourish. However, this employment growth has absorbed the public transport capacity to the Melbourne CBD.”
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