Global economic uncertainty is continuing to weigh on the Western Australian economy, but the state’s peak industry group is nonetheless forecasting economic growth of 6.5 per cent for the 2012-13 financial year.
WA's Chamber of Commerce and Industry released its quarterly business outlook today, which also predicted 6.5 per cent economic growth for 2013-14.
The previous edition of the outlook forecast growth of 7.5 per cent and 7 per cent, for 2012-13 and 2013-14, respectively.
The CCI predicted business investment would grow by 15 per cent in 2012-13, easing to five per cent in 2013-14.
Population growth and lower interest rates will see consumer spending grow by 4.75 per cent in 2012-13, and a further 4.5 per cent in 2013-14.
The greatest concern for WA is the slowdown of China’s economy, the report said, with Chinese growth easing to 7.6 per cent annual in June.
Export forecasts were revised down to 5 per cent for 2012-13, largely on the back of falling Chinese steel production and lower commodity prices.
The CCI said it expected exports to bounce back in 2013-14 however, and grow around 10 per cent.
“While the accepted consensus is that China’s economy has slowed, there are concerns that China may be in for a hard landing, with some indicators already showing a sharper than expected slowdown,” the report said.
“If activity in the Chinese economy begins to slow further, it could translate into weaker steel production and have a significant impact on WA through weaker demand for iron ore.”
The report warned that a major slowdown in the Chinese economy could result in some of the $128 billion in planned projects in WA fail to move to construction.
Other risks to WA’s growth are rising concerns that the US economy could endure a significant slowdown, while there is also some likelihood that the sovereign debt crisis in Europe could worsen and have spillover effects on global markets.
“Even if these risks were to eventuate, the WA economy is expected to remain strong in the short term, due to the pipeline of projects under construction.
