Treasurer Troy Buswell said spending will be signifcantly tightened in next year's budget while an exact forecast on how the global financial turmoil will affect the state's resource royalties revenue stream is not yet known.
China's waning appetite for iron ore, which has prompted spot iron ore prices to plummet, has put the spotlight on the state where the metal accounts for one-third of WA's total exports.
The softer demand has prompted Rio Tinto to review its divestment strategy, where it had intended to divest some $US10 billion in assets, and was reviewing expansion plans at its Pilbara operations.
ABC radio reported Mr Buswell saying the impact on the royalties revenue stream will not be known until mining companies release any changed investment plans.
He added that the revenue stream is volatile and the government will continue to monitor the movement of mining companies.
Meanwhile Mr Buswell said next year's budget will aim to reduce the rate of annual spending growth, with the previous government's 10 per cent figure now unacceptable, ABC reported.
The Chamber of Commerce and Industry WA has forecast the the state's economy to grow 5.5 per cent in the year ahead and rise 6.25 per cent by the end of the decade.
