WA economy forecast to improve: Deloitte

The West Australian, 23 April 2018

Fatter pay cheques on the way, with WA economy tipped to improvePicture: Getty Images

The sun is starting to “break” over the WA economy, one of the country’s leading forecasters has declared, with growth expected to improve and wages likely to start climbing.

Deloitte Access Economics, in its quarterly overview of the States and Territories, has upgraded its forecasts ahead of next month’s WA Budget.

After shrinking through 2016-17, the WA economy is tipped to expand this year with growth picking up one per cent over the next four years. That growth, underpinned by State Government investment and major non-mining projects, will help stabilise the jobless rate and deliver slightly fatter pay packets.

Deloitte director Chris Richardson said WA had benefited from one of the biggest mining booms on record but had suffered as that boom ended.

The just completed financial year, during which the economy shrank almost 3 per cent, would be the low point for the State.

There would be ups and downs in key economic data, but Mr Richardson said over time the recovery in WA would take hold.

“It was great. Then it was ugly. Now the sun is breaking back through the clouds again,” he said.

Some of the turmoil in official figures measuring the economy was highlighted last week when the national jobs report showed unemployment in WA at 6.9 per cent, its highest level in 16 years.

It was a one-month jump of 0.8 percentage points in the volatile seasonally adjusted figures.

Late last year, the same series showed unemployment rising 0.6 percentage points in November before falling 0.8 percentage points in December.

Deloitte is forecasting unemployment to average 6.1 per cent this year and next.

Wages are tipped to grow 0.7 per cent this year, after just 0.2 per cent in 2016-17, with a pick-up through the decade.

Despite the lift, Deloitte believes inflation will grow faster meaning most West Australians will still go financially backwards until 2020. Nationally, Deloitte believes Treasurer Scott Morrison is enjoying a surge in tax revenues which will help improve the Federal Budget bottom line next month.

But those gains are likely to be spent in areas such as tax cuts.

“The last time the economy did the Budget favours, the nation’s politicians (coalition and Labor) promised that away, too,” he said.