02/09/2015 - 11:40

Export fall hits WA, national growth

02/09/2015 - 11:40


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Falling exports have battered the June quarter GDP growth figures for Western Australia and nationally, but underlying demand increased more in WA than other states.

A slip in net exports has had a marked effect on gross state product.

Falling exports have battered the June quarter GDP growth figures for Western Australia and nationally, but underlying demand increased more in WA than other states.

WA's state final demand increased 1.5 per cent in June, according to the Australian Bureau of Statistics, following a 1.6 per cent fall in the March quarter.

That left total domestic demand for WA at $54.4 billion for the three-month period, meaning WA final demand experienced a slight contraction for the 2014-15 financial year.

However, net exports, the traditional bulwark of the state's economy, fell dramatically, leading to gross state product being overall 2.4 per cent lower.

Adding to the volatility, that number was up 1.3 per cent in March, when net exports had performed better.

The ABS said non-dwelling construction was the most important contributor to growth at 7.8 per cent, following six consecutive quarters of falls.

“(However), a fall in machinery and equipment offset that rise,” the bureau said.

“A strong rise in state and local government final consumption expenditure further contributed to strength in the state.

“Public gross fixed capital formation fell for the second quarter as public corporation investment fell.”

Government consumption spending was up more than 6 per cent on the March quarter, at $8.1 billion.

Household consumption was up marginally, increasing 0.3 per cent to $23.8 billion in the quarter, although spending on recreation, culture, restaurants and cafes was lower.

A fall in the terms of trade, declining exports and lower construction and mining activity all contributed to a soft national GDP growth figure of 0.2 per cent from March to June, in seasonally adjusted terms.

National exports fell 3.3 per cent to $84.9 billion for the quarter, while imports fell 0.7 per cent to $78.9 billion.

HSBC chief economist Paul Bloxham said it was not a strong national reuslt, but not a disaster either.

He said the growth contrasted with a number of other commodity-producing nations that had contracted recently, including Canada, Russia and Brazil.

"Growth has continued because Australia's economy has been rebalancing away from the mining sector and towards the housing and services industries," Mr Bloxham said

"Australia's terms of trade, which is the ratio of export prices to import prices, fell by 10.6 per cent over the past year and is 30 per cent lower than its 2011 peak, which is a historically large decline in the terms of trade.

"This has seen nominal GDP growth slow to a snail's pace of only 1.6 per cent over the past year.

"Real gross domestic income has fallen 0.2 per cent over the past year.

"But the impact of this negative income shock from the fall in commodity prices on GDP has, so far, been more than offset by the support the economy has had from lower interest rates and the decline in the Australian dollar.

"Lower interest rates have supported solid household consumption growth and a strong upswing in dwelling investment.

"The lower dollar has partly offset the impact of the fall in commodity prices on local incomes, but also helped to improve local competitiveness."


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