Recovery gains momentum: Deloitte

Western Australia’s economic upturn is gathering momentum, according to the latest report from Deloitte, with business investment beginning to recover and exports continuing to perform.

In fact, December quarter data suggested that business investment had provided a positive contribution to state final demand growth for the first time in at least three years, Deloitte said.

“Investment is likely to become a net positive contributor to WA growth over the next five years, however at a lower level of around 9 per cent of Gross State Product, compared to the 25 per cent peak experienced during the mining construction boom,” Deloitte Access Economics lead WA partner Matt Judkins said.

“We expect business investment to support broader economic growth in the near term as the global economic outlook improves provided interest rates remain low.”

Trade was also positive, Mr Judkins said, although a trade war or a debt crisis in China would be risks.

“Stronger global growth and sustained Chinese demand for commodities has held up WA’s export earnings,” he said.

“This has offset disappointing domestic growth.

“High levels of investment to meet the needs of an urbanising China population continue to support iron ore prices.

“We expect WA’s export growth will continue to be the state’s most important economic engine over the next five years as the export of LNG ramps up.”

House prices continued to fall, Deloitte said, although the rate of that fall had declined.

Household spending growth, particularly in retail sales, continued to be weak, and there was still a level of spare capacity in the labour market, Deloitte found.

There was still a level of underemployment, with some workers in jobs for fewer hours than they would want.

That number was beginning to fall, however, the report said.