THE Chamber of Commerce and Industry of Western Australia says the state’s economy is reaching its limits as capacity constraints become increasingly acute. 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, with projections of a more modest 4.75 per cent rise in 2006-07 and 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. Unemployment in WA is tipped to remain at 3.5 per cent.