Western Australia remains the driving force behind the nation’s economy and is predicted to sustain strong growth rates despite higher interest rates, a weak stockmarket and the United States’ economic downturn.
Western Australia remains the driving force behind the nation’s economy and is predicted to sustain strong growth rates despite higher interest rates, a weak stockmarket and the United States’ economic downturn.
The Chamber of Commerce and Industry Western Australia’s latest Economic Compass has maintained its forecast economic growth rate for WA at 6.5 per cent for the year to June 2008.
The state economy is forecast to grow by 6 per cent in the 2009 and 2010 fiscal years and then 5.5 per cent in 2010-11.
In contrast to the bullish outlook for WA, turmoil in global financial markets is expected to have an adverse impact on the Australian economy, with economic growth for fiscal year 2008 revised down from 4.5 per cent to 4.0 per cent, and then down further to 3.5 per cent in 2008-09.
While WA’s growth has been broadly based, CCIWA chief economist John Nicolaou said business investment and household consumption were the key drivers.
“The last four years have been an exceptional period of growth for Western Australia and a lot of that growth has been primarily the result of domestic activity and in particular business investment, consumer spending and to some extent household investment,” Mr Nicolaou said.
Over the 2007 calendar year, business investment accounted for half the growth in the state’s economy, increasing by 19.9 per cent, while household spending climbed 7.3 per cent, accounting for 36 per cent of the state’s growth.
Meanwhile the state’s export sector worsened, recording a 2.8 per cent fall in net exports over the December quarter and a 5.1 per cent fall for the year.
“WA’s economy has been going through a rapid expansion phase and a lot of that expansion has been centred around our export industry, particularly the mining sector,” Mr Nicolaou told WA Business News.
“It was for that reason that we did expect [export] numbers to really start to pick up as a lot of these expansions and these new projects move from construction to production phase, and at this stage it hasn’t really flowed through to the numbers.” Some key projects that are expected to move into production phase include BHP Billiton’s Ravensthorpe nickel mine and its Pilbara iron ore expansion, the North West Shelf consortium’s fifth gas train and Newmont Mining and Anglogold Ashanti’s Boddington gold mine.
The bright spots on the export front were the petroleum sector, with exports up 27.8 per cent or $542 million, and iron ore, up 6.4 per cent or $255 million over the 2007 year.
Mr Nicolaou said the unexpected fall in overall export volumes for the state forced the CCIWA to moderately revise down forecast export figures and improve domestic economy projections.
