West Australians have been warned not to get too confident about the year ahead, with Access Economics warning the state's economy had stalled significantly and that "happy days are not yet here again".
West Australians have been warned not to get too confident about the year ahead, with Access Economics warning the state's economy had stalled significantly and that "happy days are not yet here again".
The economic forecaster said despite the build-up surrounding the Gorgon LNG project go-ahead, Western Australia like the rest of the country was still impacted by the global financial crisis and may take time to fully recover.
Access Economics veteran economist Chris Richardson pointed out that business cycles in Western Australia are tied to the pace of investment in resource projects and that it is the investment rather than the export phase of projects which generate the most spending and the biggest impact on employment.
He said, however, the resource-rich states of WA and Queensland can expect to do better than 2009, but forecasts suggest there will be a reasonably level playing field across state growth throughout the country.
"Faster than a speeding global bullet, able to leap tall financial crises in a single bound, Australia has once again shown itself to be a miracle economy," he said.
"The world is recovering, but Australia is outpacing that rebound, aided by similar strength in China.
"Although the withdrawal of stimulus will hit harder than most realise - the cash splash has passed and interest rates are on the way back toward normal - recovery should continue through 2010 and 2011.
"Yet beware the overconfidence that many are now feeling: Australia's successfully small downturn means that, by the standards of history, a small recovery awaits."
Mr Richardson said there will be negatives this year as government spending eases back, and consumers may continue to reduce spending as interest rates rise.
But he expects housing construction to lift notably thanks to surging population gains, while stockholdings are set to be rebuilt as company confidence lifts.
"Interest rates will head up alongside the Australian and global recoveries, as they should. Global rate rises will start after mid-2010," Mr Richardson said.
"Australian rates are already rising, and Reserve Bank cash rates have further to go, probably lifting to the 5-5.5 per cent range by the first half of 2011 to ward off renewed inflation pressures.
"That is bad news for those with mortgages, as well as business borrowers, though easing credit spreads will eventually mean the banks pass on less than RBA rate rises rather than more."
Mr Richardson said by 2011 both exports and engineering construction would also be responding to global recovery, with Asian strength again underwriting the likes of Gorgon.
However, the Chamber of Commerce and Industry WA was more optimistic, saying the local impacts of the global economic slowdown will soon be a distant memory, as WA enters the new decade poised to enter a fresh era of economic growth and prosperity.
CCIWA chief economist John Nicolaou said the state's recovery was quick and that the turnaround in economic fortunes had been impressive.
"Increased consumer spending, an improving housing market, and a smaller than expected fall in business investment have prompted CCI to take a more optimistic outlook for the local economy, and revise up its forecasts for the current financial year," he said.
"CCI now expects the WA economy will grow by one and a half per cent this financial year, accelerating to six per cent by 2012-13.
"Local business will lead the state's economic recovery. With the global economy returning to growth, and more than $200 billion worth of major investment projects in the pipeline for WA, CCI expects investment will return as a key driver of growth in the State over the next few years.
"CCI believes business investment will grow by seven per cent in 2010-11, rising to 12 per cent by 2012-13.
"Exports will also play an important role. WA businesses are well placed to cash in on the surge in demand for key commodities as the global economy finds its feet."
The International Monetary Fund has upgraded its 2010 growth forecasts for Australia by 0.5 per cent to 2.5 per cent and said growth would accelerate to 3 per cent next year.
This is compared with its last assessment in October 2009, and said growth would accelerate to 3 per cent next year.
