The worst is over for the WA economy but it is still going to take years for the State to get back on its feet.
A report to be released today by Deloitte Access predicts the State’s domestic economy has stopped shrinking, helped along by the recent rally of commodity prices, with wages likely to finally start eking out some growth.
The WA economy has staggered under two consecutive years of contraction that has pushed unemployment up to 6.5 per cent, led to a fall in house prices and contributed to the highest commercial property vacancy rate since the 1990-91 recession.
But Deloitte Access believes the local economy will stop shrinking in the coming year, retail spending will pick up and even population growth will stop its downward slide.
Unemployment is tipped to fall in the coming 12 to 18 months although remain elevated at 6 per cent while wages will out-pace inflation.
Director Chris Richardson said WA was always going to suffer as major mining and energy construction projects were completed, leaving the State with a financial cliff that would derail even the best economies.
“A series of indicators are pointing to light at the end of the tunnel: retail sales may be weak, but they’ve been growing in recent months, while job growth is showing signs of a turnaround for the better, as are the number of job vacancies,” he said.
“That’s why we’re comfortable to say that the worst is passing, and that the next few years are likely to see improving conditions — slowly so, but the trend should be WA’s friend for the next few years.”
The improvement should make life a little easier for State Treasurer Ben Wyatt.
His Federal counterpart Scott Morrison is also likely to have a better time with Deloitte upbeat about the national economy.
Mr Richardson said continuing strong demand out of China and the lift in commodity prices of recent months was helping boost revenues into Canberra.
But he cautioned spending continued to be a major problem for the Federal Budget.
“The current improvement in the deficit trajectory simply says that the twin engines of chance — a China boom and a house-price boom — are both supporting the national tax take at the same time,” he said. “That’s great, but it probably won’t be a long-lived combination.”
Source/Shane Wright, Economics Editor
Tuesday, 18 April 2017 12:49AM