WA Economic Outlook

Analysis

WA Economic Outlook – December 2019

Time for action

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 - December 2019

The last six months have brought little good news for the WA economy. Growth has slowed and significant downside risks remain:

  • Estimates of global growth for 2019 have been revised down by the IMF, OECD and RBA. Uncertainty caused by rising geopolitical tensions, especially between the US and China, is the main culprit behind the global economic drag.
  • Though WA has escaped any direct negative effects of the US-China trade dispute, the slowdown in China’s domestic economy is expected to hit demand for WA exports in the near term.
  • Compounding this challenge, the State economy is still dealing with the effects of the decline in mining investment since the peak of the boom. Household demand and business investment remain subdued, and efforts to stimulate the economy – mainly through spending on public infrastructure – are yet to move the dial.
  • The State’s real gross state product (GSP) grew by 1.0% in 2018-19, slowing from the (revised) 2.5% growth achieved in 2017-18. This figure fell short of forecasts by Deloitte Access Economics (1.9%) and WA Treasury (2.0%).
  • WA state final demand (a measure of domestic economic activity) fell by 1.2% in 2018-19, driven in turn by a 9.1% decline in business investment. The domestic economy has contracted in five of the last six years.
  • Economic growth is a numbers game, and WA does not have the numbers where it counts: population. The State’s population grew by just 1.0% over the year ended March 2019, and despite a small uptick in net overseas migration, is still struggling with the net exodus of people to the eastern states.
  • The State Government has committed to allocate a modest slice of their growing Budget surpluses to stimulus in the form of stamp duty and payroll tax cuts, but we suspect the impact will be more fizzle than bang. While the State has the fiscal firepower, now is the time for action on supply side reform to get the economy moving.

WA Economic Outlook - December 2019

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