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WA economy bottoms out

THERE is evidence the WA economy is rebounding from a post-GST downturn and months of widespread business pessimism, with key indicators pointing to strong economic growth in the coming financial year.

Key statistics and surveys show a much rosier picture despite continuing anecdotal gloom, particularly from the retail sector.

But while the increase is significant, Chamber of Commerce and Industry senior economist Nicky Cusworth said the jump was as much a reflection of how bad the situation was as an indication of how good the situation will be.

“The WA economy bottomed out in the September quarter last year,” she said.

“It now means the State is not looking as bad as it was and we can be hopeful of strong growth throughout the 2001-2002 financial year.”

Australian Bureau of Statistics figures for the March quarter show WA’s economy grew 4.8 per cent, fuelled by investment in business equipment and consumer spending Seasonally adjusted, business investment increased by 28.5 per cent in the past quarter, up 52 per cent on the September quarter.

Business investment, notably the North West Shelf, and housing activity, which was climbing out of the post-GST slump, were expected to drive economic growth.

The renewed confidence comes after months of pessimism and is part of a national trend, according to the May Dun & Bradstreet National Business Expectations Survey.

The survey of 1200 businesses across the country showed all sectors had positive expectations for the coming financial year.

“This is the first across-the-board increase in expectations of any note for some time,” D&B head Christine Christian said.

The optimism was shared by the latest Rabobank Rural Confidence Survey, which says 60 per cent of WA farmers were expecting the sector to improve.

And Austrade urged WA exporters to take advantage of an expected surge in growth in South-East Asia of 4.7 per cent, which would put the region ahead of the global economy.

The WA Department of Commerce and Trade has unveiled a major study which found WA has much to gain from current trade negotiations with the US and Singapore. There also was the potential for improved access to China and Taiwan if those countries gain access to the World Trade Organisation.

However, there were still many threats to WA’s strengthening economy.

“The WA Government is looking down the barrel of handing down a very tough budget and, internationally, Japan’s economy contracted in the March quarter and the latest growth figures for the US have been revised and scaled down,” Ms Cusworth said.

“This could affect the export trade, which WA relies on.

“So while we are cautiously optimistic, we are realistic enough to understand there are still a lot of threats out there.”1

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