Record growth for WA in 2011-12

Western Australia's economy continues to drive that of the nation, with official figures released today showing the state grew by a record 6.7 per cent in 2011-12.

During the same period, the national economy grew by 3.4 per cent.

Treasurer Troy Buswell said the growth rate was the highest of all states, with Queensland the next highest at 4 per cent.

“WA’s domestic economy (excluding net exports) grew by a remarkable 13.5 per cent in 2011-12, underpinned by a 37.7 per cent increase in business investment,” Mr Buswell said. 

“This was partly offset by a 28.5 per cent increase in merchandise imports, with merchandise exports increasing by 4.6 per cent. 

“In nominal terms, WA’s economy (as measured by Gross State Product or GSP) was valued at $238.9billion, which equates to $100,127 per capita. 

“This is by far the highest of all States, and compares to the national average of $64,725.”

The national economy, however,  is expected to speed up in 2013, as the mining investment boom moves toward its peak.

The Westpac-Melbourne Institute Leading Index, released this morning and which indicates the likely pace of economic activity three to nine months into the future, rose to 4.1 per cent in September, from 2.9 per cent the previous month.

However, Westpac's Coincident Index, which measures current economic activity, was 2.6 per cent, below its long-term average of 3.0 per cent.

Westpac chief economist Bill Evans said the Leading Index had now been above its long-term trend for two months. However, the bank's own view of the economic outlook was a little less optimistic, with a forecast of 3.5 per cent growth for 2013.

Mr Evans said the economy would continue to benefit from the mining investment boom in 2013, with spending in the sector expected to peak in 2014.

But, he said, the outlook for 2014 was less rosy and it was likely further interest rate cuts would be needed.

"The issue around growth will emerge through 2014 when mining investment is expected to be a drag on growth," he said.

"Without further rate cuts growth is likely to struggle to exceed 2.5 per cent in 2014."

The Reserve Bank of Australia last cut the cash rate in October, to its current level of 3.25 per cent.

Westpac said the factors contributing to the growth improvement included manufacturing materials prices (up 1.2 percentage points), overtime worked (up 1.0 percentage points) and productivity (up 1.2 percentage points).