WA Economic Outlook

Analysis

WA Economic Outlook – May 2020

Time to steepen the economic curve

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 – May 2020

WA appears to have successfully mitigated the immediate health impacts of COVID-19. Now attention must turn to the State’s economic recovery:

  • The global economy has taken a body blow from COVID-19. The IMF forecasts a decline in global real GPD of around 3% in 2020, almost twice the contraction observed in 2009 in the wake of the global financial crisis. Countries that have experienced more severe health impacts of COVID-19, and have faced greater difficulty containing the virus, are likely to endure worse economic impacts too.
  • Western Australia’s status as a trading economy presents both risks and opportunities. On the downside, demand for energy has tumbled around the world and this will hit WA’s $35bn gas export sector. On the upside, the immediate outlook for prices and demand for iron ore – exports of which are worth $95bn to the State – is strong, as a key steelmaking input for countries responding to COVID-19 through infrastructure investment.
  • The second half of 2020 will be the most difficult period for WA, as the immediate impact to employment and wages works its way through the economy. We expect real gross state product to contract by around 6% in 2020-21, wiping around $17bn off the State’s economy.
  • April 2020 marked the largest month-on-month reduction in WA employment since records began, with more than 62,300 jobs lost in the State. Job losses were greatest among those aged under 30 and over 70, and in industries most directly affected by the measures taken to respond to COVID-19 – for example, employment in the hospitality industry fell by around a third.
  • We don’t see employment returning to its pre-crisis levels in WA until 2024, a sign that the economic recovery from COVID-19 will be long and slow. Both business and government will have the opportunity to use the lessons learned during this crisis to steepen the curve of economic recovery, power job creation and drive productivity growth in post-COVID WA.
WA Economic Outlook - May 2020
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