19/01/2009 - 13:01

CCI, Buswell reject recession forecast

19/01/2009 - 13:01

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A prominent Western Australian economist and Treasurer Troy Buswell have both said the state is unlikely to dip into recession in 2011, as projected by economic forecaster Access Economics.

A prominent Western Australian economist and Treasurer Troy Buswell have both said the state is unlikely to dip into recession in 2011, as projected by economic forecaster Access Economics.

In its business outlook report released today, Access Economics has forecast the state to be in the trough of a coming recession by mid-2011, with unemployment to almost double to 5.8 per cent and growth to be -0.9 per cent in the same period.

The consultancy firm has also forecast that Australia will be in recession this year.

Chamber of Commerce and Industry chief economist John Nicolau told WA Business News that people should not panic about the latest figures.

"Its not time to get caught up in the hysteria about the views held by commentators, there are going to be different views and that's based on differing evidence," Mr Nicolau said.

"One thing's for certain is that we live in uncertain times and that does creates differing opinions on the state of the economy and its future prospects.

"We diverge in terms of our expectations of where the WA economy will be in 2011 and we're fairly confident that we have a good handle and a good read on the WA economy because of the strong networks that CCI has with business and industry across the state."

Mr Nicolau said while WA will experience periods of difficulty over the next two years but will still exhibit moderate growth.

However, he added that CCIWA forecasts the state to be in an "upswing" in 2011.

"We believe the WA economy could be in the midst of an upswing phase by then and that's on the back of a global economic recovery where, I guess, demand will be created from that for WA's key commodities," Mr Nicolau said.

"We certainly believe that longer term, China and developing Asia are going to drive the global economy and WA is very well placed to ride on the back of that because of the demand that China and Asia will have for our key commodities.

"Obviously if the global economy goes through a protracted period of economic downturn then that will impact on WA and undoubtedly will impact on every jurisdiction in the world.

Mr Buswell echoed CCIWA's sentiments, however said the state is expected to slow in 2010/11.

"It is a very volatile international economic environment at the moment and I think we need to be looking at the short to medium term, one to two years out," Mr Buswell said.

"What our forecasts show is that the state report is still good and that that will slow up in 2010/2011 and I think to look beyond that is fraught with danger simply because of the volatility in the international economy at the moment."

He added that it is not the government's view that WA will go into recession.

"Ultimately the aggregate economic response in Western Australia will be determined by responses in the business sector, particularly the slowdown in export volumes and the slowdown in export prices," he said.

"I expect that there will be impacts on royalties in terms of both volume and price reductions in terms of exports. We are trying to manage the state's finances during a very difficult period and very volatile international environment."

Last month, CCIWA released revised forecast figures for WA's economy with growth estimated to be 3.5 per cent in the 2009 financial year and 3.25 per cent in 2009/10.

 

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