WA’s economic growth is expected to slow slightly over the next year amid China’s faltering post-COVID recovery and the impact of higher interest rates, CCIWA’s latest Outlook report shows.
However, the biannual report reveals there is also cause for optimism, with significant business investment flowing into the State from large-scale resources projects.
The report predicts global inflation will be brought under control in the short-term, resulting in a likely interest rate cut in Australia later this year.
It forecasts growth in the WA economy will slow to 1.5% this financial year, before lifting slightly to 1.75% in 2024-25, then dipping to 1.25% in 2025-26.
China’s slow post-Covid economic recovery, weighed down by a faltering property sector, remains a significant risk for WA, it shows.
The report also forecast:
- Business investment to grow by 12.75% in 2023-24, driven by several big-ticket resources projects, including Woodside’s Scarborough and Pluto 2 Expansion Project and Perdaman’s Urea Project.
- Household spending growth to dip, down from 3.5% growth in 2022-23 to 2% in 2023-24, before climbing again to 2.25% in 2024-25.
China slow growth
CCIWA Chief Economist Aaron Morey says China remains a key watch-point.
“We expect to see China go into a period of lower growth rates rather than any kind of collapse,” he says.
“There are still some areas of strength in China’s economy which play directly to WA’s strengths too – including high steel production which is driving continued strong demand for iron ore.”
He adds: “Continued strong business investment and a solid pipeline of major projects are encouraging signs for the longer-term strength of WA’s economy.
“However, we believe ongoing cost pressures, industrial relations reforms and regulatory reforms that delay approval timelines pose an ongoing threat to this growth.”
Morey says stronger than expected population growth, wage growth and increased property prices should lead to a recovery in spending next year, as inflation eases and predicted rate cuts take effect.
CCIWA’s Economic reports, including Outlook, are available exclusively to CCIWA Complete, Advantage and Corporate Members. For more see CCIWA’s Economic Insight page.
