Western Australia is likely to be one of the few developed economies in the world to avoid a recession during the global economic slowdown, the Chamber of Commerce and Industry WA said today in its quarterly economic snapshot.
Western Australia is likely to be one of the few developed economies in the world to avoid a recession during the global economic slowdown, the Chamber of Commerce and Industry WA said today in its quarterly economic snapshot.
CCIWA chief economist John Nicolaou said in a testament to the strength of the local economy, and the ability of local business to adapt to testing times, WA's welcomed in economic fortunes over recent months has prompted the chamber to take a more optimistic outlook of the local economy, and revise up its forecasts for the current financial year.
"Only several months ago, at the height of the global financial crisis, CCI predicted the local economy would contract by one per cent," Mr Nicolaou said in a statement.
"However, a rebound in business and consumer confidence, improved operating conditions, and a more positive global economic outlook have prompted CCI to predict that Western Australia will buck the international trend and continue to grow."
CCIWA now expects the state economy to grow by one-quarter of 1 per cent this financial year, while the world's leading developed economies, including the US, Japan, and Europe are expected to record large contractions.
Mr Nicolaou said the turnaround in WA's economic prospects was largely driven by increased levels of business investment and renewed international demand for the state's key commodity exports.
Recent surveys conducted by CCIWA measuring consumer and business confidence show that Western Australians are becoming increasingly upbeat about the prospects for the local economy.
"Confidence among WA businesses has bounced back to levels not seen since prior to the global financial crisis," Mr Nicolaou said.
"The longer term prospects for the WA economy are also positive.
"With signs that the worst of the global economic slowdown is over, CCI expects the strong levels of growth experienced across the economy over recent years to return."
The local economy is tipped to grow by more than four per cent in 2010-11 and nearly six per cent in 2011-12. CCIWA believes business investment will continue to be the key driver of the WA economy with growth expected to exceed 10 per cent by 2011-12.
The external sector, led by a stronger exports market, will also play a key role in the state's economic recovery, Mr Nicolaou said.
"Despite this improved outlook, it will be some time before labour market conditions recover. The unemployment rate is tipped to peak at 6 per cent during 2009-10, before falling to 5 per cent in 2012," he said.
"The slow decline in unemployment will hide an expected strong recovery in full time employment over the next few years, in place of part time employment.
"As a result, employment costs faced by business are expected to ease for the remainder of this financial year. However, WA businesses are concerned that the severe labour shortages, and the associated wages pressures that occurred over recent years will soon return."
