Australia will fall into recession this year with Western Australia's strong momentum expected to fade after 2010, a key economic forecast said.
Australia will fall into recession this year with Western Australia's strong momentum expected to fade after 2010, a key economic forecast said.
In a report released today, the business outlook from Access Economics said that Australia's prosperity would scale back quickly because of the slowing Chinese economy and that the federal budget would almost definitely fall into deficit.
Western Australia's strong momentum may drive it to a new peak as a share of Australia's economy in 2010, but the state's fortunes will fade thereafter, with mid-2011 forecast to be trough of the coming state recession, the report said.
Access Economics said that while New South Wales was in recession and Victoria on the brink of it, WA was "running on momentum" and eating its way through the pipeline of construction which started during the boom.
"For now that maintains the relativities of recent years, with the 'sunbelt' states [of WA and Queensland] still leading the pack," the report said.
"But the combination of a commodity price collapse and a recession should be a great leveler, ultimately weighing more on the likes of WA and Queensland and the Northern Territory than it will on NSW, Victoria, South Australia or Tasmania.
"By 2009-10 most regions in Australia are forecast to be travelling at much the same pace."
The Access Economics report said September's breakdown in banking markets had left global growth slowing at a scary speed, shattering confidence and commodity prices as it does, giving 2009's global recession unstoppable momentum.
While policymakers were "on the job", pumping equity into banks, slashing interest rates and spending to keep local economies alive, Australia was not immune from worsening markets, the report said.
However, WA has maintained its record as the state with the lowest unemployment, a record it has held for 16 consecutive months, with a fall in the number of people out of work in December.
Figures released by the Australian Bureau of Statistics last week put WA's jobless rate last month at 2.8 per cent, a slight decrease on the November rate of 3 per cent.
The national unemployment rate rose marginally to 4.5 per cent.
Acting executive director of labour relations with the Department of Commerce, Bob Horstman warned that the current figures were not as reliable as those in the past due to reduced sample sizes in the labour force survey conducted by the ABS.
