Western Australia’s economic growth remains strong, with key measures of economic activity remaining well above historical trends and outstripping national growth.
Western Australia’s economic growth remains strong, with key measures of economic activity remaining well above historical trends and outstripping national growth.
State final demand grew by 9.1 per cent between the June quarter 2006 and the June quarter 2007, running second to Queensland’s 9.5 per cent growth but still significantly higher than the national figure of 5.6 per cent.
The growth in business investment, in particular resources-related activity, was the main driver behind the growth in domestic demand, rising 23.3 per cent over the year to June 2007.
Growth in machinery and equipment (up by 21 per cent) and non-dwelling construction (up by 17 per cent) were the stand-out performers in this sector.
Business investment in WA has experienced rapid growth over a number of years as strong global demand for WA’s resources and increasing commodities prices drive investment in a number of medium and large-scale resources projects.
According to the Department of Treasury and Finance, business investment has grown by an annual average rate of 18.5 per cent over the five years to 2006-07.
But while investment is expected to continue to grow over the coming years, a number of capacity constraints, including skills shortages and rising labour and materials costs, are expected to dampen growth levels after years of extremely rapid growth.
The DTF forecasts that, while investment levels will be supported by the large number of resources projects either currently under way or recently committed to, business investment growth in 2007-08 will moderate to about 3.5 per cent.
Growing demand for WA commodities and rising prices pushed the value of the state’s exports up 23.5 per cent to $60.7 billion in the year to July 2007.
WA’s trade surplus reached $38.1 billion, up almost 84 per cent from a surplus of $20.7 billion five years ago.
WA accounted for the largest share of national exports out of all the states at 36 per cent, followed by Queensland at 20.9 per cent and New South Wales at 16.7 per cent.
The state’s biggest export market, China, accounted for $14 billion (or 23 per cent) of the state’s exports, with iron ore exports a major contributor.
Iron ore was also a major contributor in exports to WA’s second biggest market, Japan, with exports to that country valued at $12 billion in the year to July 2007.
Economists believe China’s economic growth will remain high, with WA a key beneficiary of growing commodity demand and prices.
Dwelling investment grew by 14.4 per cent during the year to June 2007, led by strong growth in new dwellings and alterations and additions.
WA’s housing market began to show signs of recovery mid year, with the number of dwellings financed for owner occupation in WA rising for six consecutive months to July 2007 after eight months of rapid decline, according to the Australian Bureau of Statistics.
The rate of decline in housing approvals has also begun to slow, after three interest rate rises by the Reserve Bank of Australia drove housing approvals down on average about 1.1 per cent each month between January 2006 and July 2007.
