Annual growth figures finish year on a high

22/10/2008 - 22:00

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THE Western Australian economy ended the 2007-08 financial year on a positive note, with most of the growth again driven by increased business investment.

Annual growth figures finish year on a high

THE Western Australian economy ended the 2007-08 financial year on a positive note, with most of the growth again driven by increased business investment.

According to the Chamber of Commerce and Industry WA, state final demand grew by 9.3 per cent over the previous financial year, the strongest growth in the nation and higher than the 8.8 per cent growth experienced during the previous year.

The gross state product is estimated to have grown in line with forecasts at 6.1 per cent, compared with the growth in Australia's gross domestic product of 3.7 per cent for the year.

Investment by business was of the main driver of growth, up by a higher than expected 21.5 per cent over the year.

Growth in business investment in WA was underpinned by increased spending on machinery and equipment, which lifted by nearly 28 per cent over the year to June 2008.

Strong population growth and low unemployment fuelled the housing market, with investment in housing up by 10 per cent.

This was despite falls in the March and June quarters.

Consumer spending, a key driver of the WA economy, was hit by rising interest rates and weakening consumer sentiment.

Household consumption in WA grew by 5.3 per cent over the year, a result that was below expectations after weaker spending in the second half of the year.

Retail sales have also slowed in recent months, with retail turnover in WA falling by 3.2 per cent between July and August to stand 1.4 per cent higher over the year.

The property market has also softened, with the number of dwelling approvals in WA decreasing in trend terms every month since February 2008, to now sit around levels last seen around six years ago. Housing finance approvals for established homes in WA fell 27.3 per cent over the year, representing the largest annual fall in 13 years.

The Perth and the national CPIs both rose by 4.5 per cent over the year to June quarter 2008, up from growth of 4.3 per cent over the year to the March quarter 2008 for the Perth index, and 4.2 per cent for the national index.

Financial and insurance services (10.9 per cent), education (7.7 per cent), transportation (6.5 per cent), and food (5.5 per cent) recorded the largest increases in prices in Perth over the year to the June quarter.

The growth in transport costs was mainly due to increases in fuel prices, which rose by 17.8 per cent over the year.

According to the Department of Treasury and Finance's WA economic summary, business investment levels in WA are very high and are increasingly dominated by resource sector projects.

The DTF says the large pipeline of project work should help to sustain activity in the short term, despite any negative effects that might flow from the economic slowdown in the US and Europe.

It adds there could be a lagged effect on investment levels if WA's major trading partners in Asia begin to experience weaker than anticipated growth

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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