The state's economy is reaching its limits as capacity constraints become increasingly acute, the WA Chamber of Commerce and Industry warns in its latest quarterly analysis.Over the year to March 2006, the local economy expanded by 10.6 per cent, double the rate of growth recorded nationally. Labour shortages, increasing wage demands and construction delays appear to be pushing the state's capacity to handle its rapid expansion. However, the good news for business is that investment is likely to remain at high levels, up 31 per cent in 2005-06, before easing to add a modest 4.75 per cent in 2006-07 and a further 3.5 per cent in 2007-08.Gross state product is forecast to reach 6.5 per cent for 2005-06, these figures likely repeated in 2006-07 before stabilising to 4.5 per cent in 2007-08. Only modest growth recorded in the export sector, despite record high commodity prices.But the CCI expects this to change in forecasting a rise, in real terms, of 15 per cent in 2006-07 and by a further 7.5 per cent in 2007-08.Unemployment in WA is tipped to remain at 3.5 per cent, a figure first recorded in May 2006, and the lowest jobless rate recorded in the state for 35 years.CCIWA chief economist John Nicolaou said the WA business sector was working to increase capacity through higher employment and investment in new buildings, structures, plant and equipment.
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