Western Australia’s stellar economic growth continues to outpace the rest of the country, despite ongoing labour constraints and wage pressures.
Western Australia’s stellar economic growth continues to outpace the rest of the country, despite ongoing labour constraints and wage pressures.
The Chamber of Commerce and Industry Western Australia’s latest economic outlook shows the state’s domestic economy grew 12 per cent in the year to December 2007, the fastest growth of all the states.
Business investment, consumer spending and dwelling investment, bolstered by strong population growth, were major contributors to WA’s economic growth.
Gross state product growth for 2006-07 reached 6.3 per cent, eclipsing fellow resource state Queensland’s 4.9 per cent and almost doubling the gross national product of 3.2 per cent.
The CCI said it expected the economy to grow by 6.5 per cent in 2007‑08, before steadying to 6 per cent over the medium term.
The major driver of the domestic economy in the September quarter was household consumption, which grew by 1.8 per cent, the highest rate in three years.
Over the year to September, consumer spending increased by 6.1 per cent when compared with the same period last year.
Despite recent interest rate rises, record low unemployment and population growth pushed housing investment up 4.9 per cent in the September quarter 2007, dropping back from the 7.2 per cent increase for the previous quarter.
And while business investment was down 1 per cent for the quarter, over the year to September, business investment surged 37.3 per cent higher thanks to higher levels of business activity in the previous quarters.
The labour market continued to tighten, with unemployment remaining at a low 3.4 per cent in November, while the number of people employed increasing 3.1 per cent over the year to November.
Job vacancies reached a record high of 29,730 jobs advertised in the September quarter, more than four times as many jobs being advertised than during the September quarter 2003.
CCIWA chief economist John Nicolaou said labour shortages would continue to remain the number one supply side constraint on the WA economy.
The CCI estimates that, over the next 10 years, WA will require an additional 400,000 jobs if the current growth profile is to continue. It warns that if measures are not adopted to boost the labour force, labour shortages could significantly impact on the ability of the economy to sustain its growth.
Mr Nicolaou said the government needed to approach the issue from a number of angles, including increasing temporary and permanent migration, boosting participation rates in the current population, as well as broader policy issues such as housing affordability.
“It requires a multi-faceted approach. There’s no silver bullet,” he said.
But despite key pressures, the CCI says the outlook for the WA economy remains very positive, with exports expected to be the key driver of growth.
