CCIWA Chief Economist
Aaron Morey
WA’s economy is off the ropes and fighting back. CCIWA’s biannual Outlook report, released today, shows WA’s growth has broken through the pre-COVID projections for our economy. It positions WA as one of the few economies in the world to have achieved the transition from recovery to expansion.
Outlook is the only WA-based non-government forecast of our economy.
The opening bout with COVID pummeled our economy back to the size it was in 2010, with 100,000 jobs knocked out. But WA’s domestic economy has climbed off the canvas, and is now poised to grow 3.1% in 2020/21, up from the previously expected 0.7%. Even stronger growth of 3.5% is expected in 2021/22, which would be the fastest growth in the domestic economy for nearly a decade.
WA’s punch is being powered by commodities. Prices are soaring from strong demand in China, with iron ore royalties adding $1.2 billion to State balance sheets.
Record low interest rates and generous housing grants have sparked a dramatic turnaround in dwelling investment, from a -13.2% fall in 2019/20, to an estimated 21.2% expansion in 2021/22.
The success of the WA Government in containing COVID-19 has also enabled historic Federal stimulus to flow freely through our economy, bolstering household consumption growth to an expected 2.5%.
These factors do not, however, assure WA’s continued winning streak.
Skills shortages are impacting four out of five (79%) WA businesses, trapping our economic engine in a lower gear. With closed state and international borders, we have no emergency release valve to ease the pressure. There is also a lack of new significant business investment on the horizon, with non-mining investment having contracted in seven of the past eight years.
To continue to compete at this level, WA needs to throw a few well-targeted economic punches. This must include swiftly reaching 80% community vaccination, to enable the safe re-opening of our economy to Australia and the world. We should cultivate business investment by reducing our payroll tax burden to a more competitive level, better marketing our investment opportunities to an international audience, and unlocking the full potential of working parents by letting kindergarten funding flow to WA kids, no matter where they receive care. We should also not overlook the option for reinvigorating the national economic reform effort with clear options for taxation and industrial relations reform to raise productivity, stimulate growth and lift prosperity.
Landing this powerful combination of blows would make WA a world heavyweight contender when it comes to attracting business investment and skills.
Read the full Outlook report at: https://cciwa.com/resource-centre/economic-insight/#1571631790832-e3460960-0fa6
This edition of Outlook features Premier Mark McGowan on the cover, the first time a WA Premier has appeared on the report in 15 years of publication.
Media contact: Thomas Adolph 0427 876 846
