About the NSW economy

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.

The 2025–26 Half-Yearly Review reaffirms the Government’s commitment to restoring fiscal sustainability while providing essential services and infrastructure for the community.

The State’s budget is on track to return to surplus by 2027–28 as projected in the 2025–26 Budget. Gross debt is projected to stabilise around 20 per cent of gross state product (GSP).

The State’s operating position continues to improve. The deficit in 2025–26 is projected to narrow from $3.4 billion at the 2025-26 Budget to $3.1 billion.

The State’s infrastructure program is projected to be $28.2 billion in 2025–26, one of the largest on record in the history of New South Wales. However, over the four years to 2028–29, the State’s infrastructure program is projected to be $111.5 billion.

This reinforces the Government’s aim to reset the infrastructure program to more sustainable levels of around 2 per cent of GSP to better align with market capacity and avoid delivery delays and cost overruns while maintaining a steady pipeline of investment.

Gross debt is projected to be $177.2 billion at June 2026, which is $1.5 billion lower than projected at the 2025–26 Budget as stronger revenues and slower than expected capital spending reduces in year borrowing requirements.

Gross debt is also $11.0 billion lower than projected at the 2023 Pre-election Budget Update, saving the State approximately $500 million per annum in interest expenses.

Gross debt to GSP is projected to be 19.2 per cent by June 2029, down from the 19.6 per cent projected at the 2025–26 Budget due to lower projected borrowing requirements and stronger GSP forecasts.

Since the 2025–26 Budget, the State’s triple-A credit ratings have been maintained by Moody’s and Fitch. S&P Global has maintained the State’s double-A plus rating, with a negative outlook.

Over the budget and forward estimates, expense growth is projected to average 2.6 per cent per annum. This is marginally higher than the 2.4 per cent projected in the 2025–26 Budget but remains well below the 6.5 per cent average annual growth between 2011–12 and 2022–23.

Employee expenses are $2.9 billion higher over the budget and forward estimates than at the 2025-26 Budget, driven by higher projected expenses for insurance and compensation schemes (excluding workers compensation reforms), and higher employee expenses associated with the future operation of the Northern Beaches Hospital under public ownership.

Over four years to 2028–29, expenses are projected to increase by $4.0 billion compared to the 2025-26 Budget. Key new measures include:

• $339.6 million over three years to 2027-28 for the extension of the Preschool Reform Agreement to the end of 2027, providing funding certainty while allowing for further work with the Australian Government and other jurisdictions on a long-term agreement. The expenses are fully offset by revenue from the Australian Government
• higher expenses associated with the future operation of the Northern Beaches Hospital under public ownership
• permanently continuing toll relief in the form of a $60 per week cap from 1 July 2026 for Sydney’s roads
• increased employee expenses relating to NSW Health industrial instruments, including an increase in night shift penalties for NSW Health nurses and midwives from 15 to 20 per cent, and salary increases resulting from award modernisation processes for a range of NSW Health staff.

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).