Western Australia remains the powerhouse of the nation and shows few signs of slowing despite the international economy continuing to feel the impact global financial crisis, the Chamber of Commerce and Industry of WA said today.
The state's peak business organisation released its quarterly snapshot of the local, national and international economies, painting an optimistic picture of WA's economic prospects.
The report found that the WA economy finished 2007-08 with the strongest rate of growth of all the states and territories, accounting for more than 20 per cent of national demand.
CCIWA chief economist John Nicolaou said the WA economy was growing nearly twice as fast as the rest of the nation.
"The outlook for the WA economy remains strong despite the continued fallout from global sharemarket falls and credit restrictions," he said.
More than $25 trillion has been wiped from global sharemarkets in the past year, and growth has been stalled in the key economies of the United States, Japan and Europe.
Mr Nicolaou said WA was well placed to withstand the slowdown, primarily due to its strong trade links with China, which remains on track to record its sixth consecutive year of double digit economic growth.
CCIWA predicts continuing investment in capacity building and infrastructure projects will underpin China's economic performance.
As a result, CCIWA's forecast for the state's economic growth remains unchanged, with growth of 5.5 per cent expected in the year ahead. Economic growth is expected to rise to 6.25 per cent by the end of the decade.
A ramp up in exports is expected to be the key driver of the state's economic growth in the year ahead, following years of strong investment in capacity expansions in the resources sector.
Meanwhile, state economic conditions are expected to be softer, as consumers wind back their spending due to higher borrowing costs and the negative wealth effects of falling house prices and equity values, while a pause in business investment is also expected as a number of major projects reach completion.
Mr Nicolaou said the continued strong economic conditions also meant that the WA labour market was expected to remain tight, with unemployment forecast to remain at a historically low 3.5 per cent in 2008-09.
He said while labour shortages remain a key constraint on the WA economy, businesses' ability to source suitable workers appears to have improved in recent months, as a result of record migration flows from interstate and overseas, and rising levels of labour force participation among the existing population.
