An increase in exports and population growth is expected to drive WA’s economic expansion in the next six months, but inflation and concerns about China’s recovery will weigh on WA’s outlook, according to CCIWA’s latest Outlook report.
CCIWA Chief Economist Aaron Morey said despite the generally positive outlook, there will likely be a slowdown in momentum. 
“Households continue to feel the pinch of higher living costs which will weigh on spending, while business investment is expected to consolidate at higher levels,” he said.
“However, improved export outlooks for iron ore and agriculture and solid population growth should help sustain economic activity over the next 12 months.”
The report also found:
- Despite soaring living costs, household consumption in WA was higher in FY2023-24 financial year than previously forecast, driven by rising wages, property price increases and strong population growth.
- Household spending growth is expected to slow to 2.0% in FY2-24-25 as households consolidate their spending.
- WA’s housing market will continue to run red-hot, with dwelling investment to rise by 3.75% in FY2024-25 and 5.5% in FY2025-26.
“Dwelling approvals have risen by 58.9% since June last year and there are more than 25,000 homes sitting in the pipeline, but supply-side constraints like high construction costs and skills shortages will continue to be a drag on the delivery of new homes,” Morey said.
As expected, China’s slower than expected recovery will continue to weigh on WA’s economic growth, with the ongoing slump in China’s property sector is showing no signs of improving.
“While there are clear concerns around the current state of China’s economy, we’re optimistic in its future as it shifts towards lower, more sustainable growth rates,” Morey said.
“Also, a significant amount of steel will be needed to build transmission infrastructure needed in the global energy transition, which should support baseline production levels, aiding WA’s iron ore exporters over the longer term.”
The Outlook report found geopolitical tensions in the Middle East and Ukraine continue to fuel global economic uncertainty, as well as the looming US Presidential election.
“Globally, protectionism is on the rise, with more countries seeking to onshore or “friend-shore” their supply chains,” Morey said.
“The number of trade restrictions has surged over recent years, with more than five times as many restrictions in place today compared to 2015.
“This growing geoeconomic fragmentation could further constrain trade, leading to weaker growth and the potential for higher and more volatile prices.”
CCIWA’s Economic reports, including Outlook, are available exclusively to CCIWA Complete, Advantage and Corporate Members. For more see CCIWA’s Economic Insight page.
