WA seems to have dodged the global bullet and is set to power ahead, but there are a couple of flies in the ointment, a leading economic forecaster says.
Access Economics’ latest business outlook says the state, despite its international focus, is benefiting more than usual from domestic economic measures, such as the stimulus package and low interest rates.
While the effects of the former subside, and the latter start to rise, other factors such as strong population growth – and the effects of the $43 billion Gorgon gas project – would keep the WA economy ticking along nicely.
But while Gorgon might have helped WA sidestep the worst effects of the global financial crisis, it also served as a timely reminder.
“That crises come and go, whereas the demand to feed industrial developments in Asia will be with us for many decades to come,” the report says.
“But you’d have thought that the worst year in the global economy since the global economy since the Great Depression might have punched a bigger hole in Western Australia’s business cycle.”
That seemed the way the state’s economy was initially heading, as employment and retail sales plunged faster than the rest of the country, and exports to the UK, US and Japan fell.
But exports to India doubled in the past year, while those to China rose 10 per cent – even given a 30 per cent plus fall in iron ore prices.
However, there were a couple of dark spots on the economic horizon.
One was a rising risk of Chinese demand for commodities “falling away” in 2011, which could also lead to a slump in prices.
There were also some worrying signs for commercial construction with a sharp drop in recent building approvals likely to lead to a further slowdown in work.
“But as a longer term story… Western Australia remains on the right side of history,” the report says.
Engineering construction looked to be kicking on strongly for “a while longer”, with plenty of resources projects under way.