Economy likely to exceed forecasts

The WA economy will grow strongly during the next 18 months, even more so than the State Government predicts.

This is according to two leading economic research institutes who have forecast State final demand will increase by around 4.5 per cent over the period.

In recently published State budget papers, the WA Treasury tipped a four per cent growth rate in 2000-2001.

The forecasts come from Curtin University’s Institute for Research into International Competitive-ness and the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne.

In the latest issue of the Western Australian Quarterly Bulletin of Economic Trends, the institutes said the factors that held back the State’s growth rate during the past 18 months “are now past” and the outlook was bright.

“Growth is projected to be particularly strong over the December quarter of 2000 and the first two quarters of 2001,” the report said.

“Following a further decline in investment levels through the September quarter, it is forecast that this aggregate will also increase sharply over the first two quarters of 2001.

“Employment growth is projected to continue at current levels, although increases in the participation rate will limit further falls in the unemployment rate.”

Launching the July issue of the bulletin at a business forum last week, IRIC director Professor Peter Kenyon said the institutes forecasted a similar growth rate for the national economy during the same period.

They also predicted further “but fairly modest” tightening of interest rates.

In relation to WA, Professor Kenyon said mining investment was expected to bounce back and the “fairly healthy” capital works program announced in this year’s State budget would help boost economic growth.

“We also see a strong labour market and strong consumption demand,” he said.