Key points:
• WA’s economic growth expected to slow to 1.75% this financial year.
• China’s slow recovery post-COVID is predicted to be a major drag on WA’s economy.
• Weaker household spending in WA also predicted, driven by cost-of-living pressure.
• Fundamentals of WA’s economy remain robust, underpinned by large-scale business investment, resources sector and residential construction.
China’s slowing economic recovery is emerging as a key pinch-point for Western Australia, according to the latest economic outlook produced by CCIWA.
CCIWA’s half-yearly Outlook report, titled Miracle Over? finds solid household spending, a resilient jobs market and strong export activity are contributing to WA’s ongoing economic stability.
But Chief Economist Aaron Morey warns economic storm-clouds are gathering over WA’s biggest trading partner, China.
“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 said.
“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.”
The report predicts WA’s overall economic growth to slow to 1.75% this financial year.
“There’s no doubt global conditions are a drag on WA’s economic growth, but the fundamentals underpinning our economy remain strong,” Mr Morey said.
“Large-scale business investment, the State Government Asset Investment program and a strong residential construction sector are all contributing to the modest growth we expect to see.
“However, local challenges remain – interest rates and the soaring cost of living are expected to weigh heavily on household spending, which we predict will grow by a modest 1.0% this financial year.”
The report predicts business investment to grow 6.5% this financial year and 5.5% in 2024-25, notwithstanding any changes to conditions including persistent inflationary pressures, prolonged labour shortages or regulatory reforms that impact environmental approval times.
Mr Morey said the threat posed by China’s slow recovery highlighted 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 said.
“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.
“The prosperity of our children and grandchildren in Western Australia will hinge on our success in achieving this.”
CCIWA delivers WA’s only independent, non-Government economic forecasting, offering the most reliable and robust insights into our state’s economic picture.
The full outlook report is available to CCIWA members.
/ENDS
Media contact: Alison Savage 0400 303 182/ [email protected]
