Economic winter ending for WA

THE gloom is lifting from the local economy as improving commodity prices promise a strong recovery.

Business investment, crucial to the WA economy, is also tipped to rise in 2000.

And while WA’s unemployment rate has increased from 6.4 per cent to 7.1 per cent, optimism appears to abound in the job market.

Economic activity in the WA economy rebounded in the June quarter after two consecutive quarters of negative growth.

A joint study by Curtin Univer-sity’s Institute for Research into International Competitiveness and the Melbourne Institute of Applied Economic and Social Research, found the previous poor performance was due to the impacts of the Asian financial crisis and low commodity prices.

Curtin’s Quarterly Bulletin of Economic Trends says the outlook for the labour market is the most optimistic since projections have been prepared.

The positive outlook for the WA labour market was underlined by a 6 per cent increase in the ABS Job Vacancy series in the three months to August.

BIS Shrapnel chief economist Frank Gelber said he expected the unemployment situation to improve because economic growth had been largely a result of increases in productivity.

Dr Gelber said it was unlikely productivity gains could be sustained, so growth in employment should occur soon.

He said it was probable the economy would continue to grow in the lead up to the Olympics and the introduction of the GST, decline in late 2000 into 2001 before booming by the middle of next decade.

According to the Curtin bulletin, forecasts for the next two years suggest the worst of the business investment slump may be over.

“Forecasts are for investment growth to return to positive territory in the December quarter and to increase to between 8 per cent and 10 per cent by this time next year,” the Curtin bulletin says.

Business investment grew by 14 per cent in the June quarter when compared with the March quarter.

The Chamber of Commerce and Industry’s WA Economic Review says “there will be lags between any improvement in the export and investment outlook translating into a recovery in business investment”.

The June 1999 Access Economics/ Delta Electricity Quarterly Invest-ment Monitor identifies $66 billion of possible projects in WA, by far the largest project list of any state.

The Industrial Supply Office of WA indicates a number of resources investments have a strong chance of commencing in the 1999/2000 year.

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