Queensland's positive economic outlook may be severely dampened if the state's key primary industries fail to receive enough rain for the rest of the year.
While the number of shires officially drought declared has declined, this week's state Budget papers show 60% of the state's land area is still in official drought conditions.
Additionally, agricultural employment in Queensland is failing to recover at the same rate as the national average of 3.5% - employment in Queensland fell by 12.9% in the first three quarters of 2003/04 compared with the previous corresponding period.
"The outlook for Queensland's agricultural sector in 2004/05 and beyond remains heavily dependent on the weather," the papers state.
"While seasonal conditions appear to be improving, a statewide recovery from the drought is expected to take some time, with ongoing impacts on Queensland's agricultural production, exports, employment and overall economic growth.
"Should the drought persist for longer than expected or conditions worsen, rural production and exports, and therefore overall economic activity and employment, may grow at a lower rate than currently forecast."
While other states were hit harder during the worst of the drought, New South Wales and Victoria, in particular, are expecting vastly improved crop production levels due to favourable rainfall.
However, Queensland's main primary industries - beef and sugar - have suffered from vastly reduced production outputs, with the meat cattle herd falling by more than half a million head in 2002/03 and sugar production falling by 8%.
And while there has been good news with crop production in the state expected to dramatically improve for both the winter (+62%) and summer (+55%), southern states are expected to harvest record winter crops.
Rural exports fell by 13.7% in 2002/03 and fell another 12.3% in first three quarters of 2003/04 compared with same period last year.
To soften the blow, the Budget allocated a greater share to the Queensland Rural Adjustment Authority (QRAA) to administer loans to drought-affected farmers and small businesses.
The allocation of $81 million is $34 million more than previously projected for the 2003/04 financial year.