While forecasts for the WA economy may be humble – with a 0.9 per growth rate expected this year – they are not the doom and gloom of the last few years.
CCI’s CEO Chris Rodwell will breathe life into the numbers released in CCI’s biannual publication Outlook that shows WA is at a turning point at the CCI-ANZ Economic breakfast on March 27.
He will be joined by ANZ Chief Economist Richard Yetsenga, CCI Chief Economist Rick Newnham and former Fremantle Dockers captain Matthew Pavlich.
Newnham told a recent business breakfast that the 0.9 per cent growth forecast was small compared with China’s economy, which is growing at 6.5 per cent and but down from 14 per cent.
“That is a pretty stark difference but WA has experienced some pretty difficult times in recent years,” he said.
“You might not realise it but last year the WA economy actually shrunk. The WA economy has been in domestic contraction for four to five years, so if you take exports out of the economy, the economy has been contracting.
“Even though we’ve had enormous LNG and iron ore projects starting up and exporting, the WA economy still contracted last year by 2.7 per cent.”
Newnham says there is no expectation WA will return to the boom times of the 2008-12 period, but the State is expecting to see a stabilising of business investment and WA-driven growth in the economy.
“The whole story with the economy is we have dropped off a cliff in business investment and business investment is what drives employment growth in this state, so major LNG and iron ore projects have been constructed and have started exporting.
“These projects typically employ 10 times the people during construction than they do during operation.
“So as business investment has fallen we’ve shed a lot of jobs. A lot of those people have picked up their lives and returned to the east coast or overseas after they came here chasing those high paying jobs in the first instance.”
Newnham says the fall in business investment has acted like a weight dropping through the economy, dragging down the State.
“It’s not until the business investment in WA stops falling that really the economy can get back on its feet and continue to grow,” he says.
“We think by our forecast that we are 95 per cent of the way down that business investment cliff now and this is the last year it will fall and next year it will return to business investment which will bring the whole economy along with it.”
Newnham will reveal more about the key indicators such as wage growth, employment and the impact of population changes at the breakfast.
► Hear the latest economic insights and predictions for WA business — get your tickets to the CCI-ANZ Economic Breakfast now.
