WA Economic Outlook

Analysis

WA Economic Outlook - August 2018

Ringside for the trade war

The WA Economic Outlook is a summary of the Deloitte Access Economics Business Outlook publication with a specific focus on the Western Australian economy.

WA Economic Outlook - August 2018

Since our April outlook, WA’s domestic economy has continued down the path of slow and steady recovery – but the risks posed by US-China trade skirmishes and policy instability on the east coast have escalated.

  • Strong global growth has underpinned strong demand for WA’s commodity exports, particularly LNG. The external sector has kept the WA economy afloat in recent years, and looks to remain a key source of growth
  • Oil prices have surged as political instability in Venezuela and trade sanctions on Iran have diminished supply. That’s good news for WA’s burgeoning LNG exports, most of which is sold on oil-linked prices. Increased production from recently completed megaprojects will shortly make WA the largest LNG exporter in the world to 
  • Unemployment remains high at 6.2%, and while 11,800 jobs were created over the last 12 months, only 15% were full time. Slack in the labour market has left wage growth flat at 1.5%, well below trend
  • While the direct impact on WA of a potential trade war between the US and China is likely to be small, an adverse effect on China’s ability to manage its debt is a real risk. China is, and is set to remain, the single biggest driver of growth for WA’s international exports
  • Across Australia, household debt as a share of income has reached an all-time high. The property market in WA remains flat, leaving many heavily-indebted mortgage holders vulnerable to a potential increase in interest rates, which the Reserve Bank could action as early as late 2019
  • Sandgropers warmly welcomed the announcement of long-overdue GST reform in June, but the recent shambles in Canberra is a timely reminder that political instability can be a barrier to sensible policy – especially with a federal election due within eight months.

WA Economic Outlook - August 2018

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