Good time for a poll

WA’s domestic economy is slowing quite dramatically.

In the June quarter of 2000 the State economy grew by 0.4 per cent. In the September quarter, the economy contracted by 3.3 per cent.

The main detractors from growth in the September quarter were business and dwelling investment.

Each of these shrank by 3.5 per cent and 1.2 per cent respectively. While the public sector increased by 4.2 per cent to contribute 0.9 per cent percentage points to growth, this was insufficient to offset the decline in those areas. Private consumption was also higher and contributed 0.5 per cent percentage points to the growth rate.

Another reason cited for the decline in the last quarter was the staging of the Olympic Games.

The Games were good for New South Wales but not for the rest of the country.

A number of companies operated at reduced capacity as employees took the opportunity to head east for the games.

The GST-induced decline in dwelling construction in the September quarter was all a question of timing.

The vast number of projects that were brought forward to the previous 12 months did give the figures for that time an artificial boost.

With the very real prospect that interest rates are likely to be reduced next month, it would be hoped that the dwelling downturn will only be a temporary one and that we will resume some growth in the near future.

There was a substantial decline in business investment in that quarter. This seems to have been caused by the weakening of the Australian dollar. Most of our plant and equipment is imported. Given the increased cost to manufacturers, this could have caused them to delay their decisions or even defer them indefinitely.

The December quarter figures are awaited with a great deal of interest. The decline is expected to have reversed itself by that stage and the decision of the Premier to go to the polls might well be seen as a wise one.

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