CCIWA Chief Economist Aaron Morey
4 March 2020
WA’s economy has sailed into the oncoming COVID-19 storm in a fragile state, according to data released today.
While the national economy grew 0.5 per cent in the December quarter, the WA domestic economy contracted 0.2 per cent, putting WA among the weakest-performing states. This continues the trend identified in CCIWA’s Outlook report, which found the WA economy was treading water.
Declines in business and dwelling investment drove the disappointing result in the most recent quarter. Business investment was weak across the board, with investment in machinery and equipment falling 1 per cent, and commercial construction falling 0.7 per cent. Business investment is a significant part of the WA economy, meaning even small declines can have a large impact.
On a positive note, households were spending more confidently with consumption growing 0.5 per cent in the quarter. And the slower moving ‘annual average’ growth measure for the overall domestic economy ticked over into positive territory, though by encompassing data that is two years old, this is less reflective of the current health of our economy.
Today’s data release marks the end of a rollercoaster decade, in which WA roared to 11 per cent growth early on, whimpered in the middle, and clawed back to a small positive result by the end.
The upshot is that prior to COVID-19 hitting, the WA domestic economy was shaky. As such, while coronavirus will require short-term policy attention, we must also stay focused on policy reforms to help drive a more competitive WA economy.
With six in every seven WA jobs depending on the strength and resilience of a business and the State’s ambitious job-creation target, governments need to look at every potential avenue to grow jobs and boost the competitiveness of our local businesses. To this end, the government should reform WA’s byzantine retail shopping restrictions, enhance competition in the retail electricity market, and ensure government agencies and local councils reduce the many barriers to investing in our great state.
CCIWA is confident that with a renewed focus on reform, and building on improved finances and recent payroll tax relief, Western Australia will be in a reasonable position to withstand global headwinds.