CCIWA Chief Economist
Global interest rates are rocketing at the fastest pace in history, aimed at reining back rampant inflation. With the global economy on a knife-edge, CCIWA’s biannual ‘Outlook’ report, entitled “Will We Bottle It?” shows WA’s economy is set to withstand the harsh monetary medicine.
As the pressure peaks, our latest report – the only non-government forecasts of the economy produced in WA – sees WA’s private sector shoring up our economy.
Surging interest rates and costs will dampen WA household spending growth to 3% this financial year and 0.75% beyond. But in the face of rising costs and geopolitical risks, business investment growth of 4.0% this financial year will underwrite the economy. It comes in the form of large projects like Woodside’s Scarborough and Pluto 2 extensions, newly announced resources and agriculture projects, and investment in critical minerals and the sustainable energy transition.
This puts WA’s domestic economy on track to grow 3.5% in 2022-23, an easing of 2.1% since last year.
Although there are signs that key strains on our economy – namely inflation, supply chain constraints, and workforce shortages – may have peaked, the coming 12 months will be challenging.
WA remains the only state with more job vacancies than unemployed people, and unemployment is expected to average 3.5% for the rest of the financial year. Russia’s war against Ukraine persists, and geopolitical pressure to ‘decouple’ China and the United States continue.
With a global economy on the knife-edge of uncertainty, WA must grasp every opportunity to grow, diversify and attract investment, emerging industries and skilled workers. The business activity which has shielded WA’s jobs and economy through these heightened risks cannot be taken for granted. Easing our uncompetitive tax on jobs, which burdens WA businesses more than any other State, is a critical place to start.
The full Outlook Report is available to CCIWA members