Western Australia has reached a turning point – we are through the worst of the state’s economic woes.
This is the message from WA’s peak business body, the Chamber of Commerce and Industry WA (CCI), as we release our biannual forecast for the WA economy, Outlook, outlining how we think the economy will perform over the next three years.
CCI Chief Economist Rick Newnham said CCI is confidently optimistic about the future, forecasting that the whole state economy will grow by 0.9 per cent this year, and will continue to improve.
“This will be welcome news to business and families following a year of negative economic growth that has put pressure on investment, wages and job creation,” Mr Newnham said.
“A few key indicators tell us WA is now confidently on the mend – consumer and business confidence are at a four year high, 15,000 full-time jobs have been created in the last year, and exports are growing at 5 per cent a year.
“We estimate that WA is now 95 per cent of the way down the business investment cliff which means the sharpest falls in investment should be behind us.
“Our state’s falling business investment has been a weight pulling down WA’s economy and restraining jobs growth. Once business investment stops falling and returns to growth, which we expect will be this year, the whole economy will begin to pick up.
Flexibility in the labour market has taken the sting out of the economic pain in WA after the mining construction boom, and the creation of part-time jobs has helped to prevent a major fall in household spending.
“CCI expects the jobs market to continue to improve this year, forecasting an unemployment rate of 5.6 per cent next financial year,” Mr Newnham said.
“This should be welcome news for job hunters and those that are already employed – when there are more people in work and fewer people competing for limited job vacancies then we can expect wages growth to return to WA as well.
“Wages growth has been quite low in advanced OECD nations around the world, like Australia, over the last few years but once the unemployment rate falls in WA we expect wages growth to rise.
“CCI forecasts wages to grow by 1.7 per cent this financial year, and increase to 2.4 per cent growth in 2018-19.”
WA continues to spearhead the nation’s trade effort, accounting for more than 35 per cent of Australia’s total exports. CCI forecasts a 6 per cent increase in exports this year as more LNG and iron ore is shipped abroad and commodity prices rally slightly higher than last year.
“The dark clouds of the WA Government’s deficit and net debt looms overhead as a threat to WA’s economic recovery,” Mr Newnham said.
“For business confidence to turn into job creation, WA businesses need to feel confident that the State Government will maintain the current investment climate.
“The Government must keep its focus on reducing spending to tackle net debt, not introducing new or increased taxes, fees or charges to ensure that business confidence continues to improve in WA and more jobs are created.”
To view Outlook, please click here.