According to the latest predictions by the Chamber of Commerce and Industry WA (CCIWA), China’s slowing economic recovery is expected to be a major drag on Western Australia’s economy.
CCIWA’s half-yearly Outlook report, titled Miracle Over?, found that solid household spending, a resilient jobs market and strong export activity are contributing to Western Australia’s ongoing economic stability.
CCIWA Chief Economist, Aaron Morey, warned that economic storm-clouds are gathering over the state’s biggest trading partner: China.
“There had been hopes that China’s economy would roar back to life after years of COVID lockdowns – but that roar hasn’t been heard,” Mr Morey said.
“Consumer confidence is down in China, youth unemployment is at record highs, foreign investment has plummeted, and China’s property sector is also shaky.
“These conditions are creating a degree of uncertainty for Western Australia’s economy.”
The report predicts Western Australia’s overall economic growth to slow to 1.75 per cent in the 2023-24 financial year.
“There’s no doubt global conditions are a drag on Western Australia’s economic growth, but the fundamentals underpinning our economy remain strong,” Mr Morey said.
“Large-scale business investment, the State Government Asset Investment program and a strong residential construction sector are all contributing to the modest growth we expect to see.
“However, local challenges remain – interest rates and the soaring cost of living are expected to weigh heavily on household spending, which we predict will grow by a modest 1.0 per cent this financial year.”
The report also predicts business investment to grow 6.5 per cent in 2023-24 and 5.5 per cent in 2024-25, notwithstanding any changes to conditions including persistent inflationary pressures, prolonged labour shortages or regulatory reforms that impact environmental approval times.
Mr Morey said the threat posed by China’s slow recovery highlighted the need for policy settings that will harness Western Australia’s economic potential.
“Our state, with its abundance of natural resources and critical minerals, is uniquely positioned to capitalise on the transition to net zero, advancements in new technologies and adjustments in international trade patterns.
“But we can’t bank on this happening by itself – State and Federal Governments need to position Western Australia as the most attractive place to do business by developing a better tax system, starting with a more competitive payroll tax regime.
“It’s also critical to reduce the unnecessary regulatory burden faced by businesses looking to invest in the industries needed to power our future.
“The prosperity of our children and grandchildren in Western Australia will hinge on our success in achieving this.”
