CCIWA Chief Economist Aaron Morey has highlighted the need for reforms in the face of economic headwinds that are expected to halve the State’s growth this year.
Commenting on the release of CCIWA’s half-yearly Outlook report, titled ‘Miracle Over?’, Morey says China’s slowing economic recovery is emerging as a key watchpoint for WA.
China’s year-ended growth was a lower-than-expected 6.3% in June, stoking fears the economy may miss its modest 5% growth target by the end of 2023, the report says.
“There had been hopes that China’s economy would roar back to life after years of COVID lockdowns – but that roar hasn’t been heard,” he says.
“Consumer confidence is down in China, youth unemployment is at record highs, foreign investment has plummeted, and China’s property sector is also shaky.
“These conditions are creating a degree of uncertainty for WA’s economy.”
WA’s economic growth is expected to slow from 3.5% in 2022-23 to 1.75% this financial year, the CCIWA report says.
It says while pillars of WA’s economy remain sound, underpinned by forecast 6.5% growth this year in business investment, a globally competitive, diversified resources sector, and robust residential construction, weaker commodity demand and pricing could be a major economic drag. Reduced household spending in WA is also predicted, driven by cost-of-living pressure.
“Interest rates and the soaring cost of living are expected to weigh heavily on household spending, which we predict will grow by a modest 1% this financial year,” Morey says.
Morey says the threat posed by China’s slow recovery highlights the need for policy settings that will harness WA’s economic potential.
“Our State, with its abundance of natural resources and critical minerals, is uniquely positioned to capitalise on the transition to net zero, advancements in new technologies and adjustments in international trade patterns,” he says.
“But we can’t bank on this happening by itself. State and Federal Governments need to position WA as the most attractive place to do business by developing a better tax system, starting with a more competitive payroll tax regime.
“It’s also critical to reduce the unnecessary regulatory burden faced by businesses looking to invest in the industries needed to power our future.”
CCIWA delivers WA’s only independent, non-government economic forecasting, offering the most reliable and robust insights into WA’s economic picture.