'Non-mining sectors to cushion WA's fall'
WA's transition to slower growth as the mining boom dies down will be moderated by the growth of other sectors, Deloitte Access Economics says in a report.
Releasing its latest Business Outlook for WA, the economics advisory group noted a "construction cliff" whereby big investment in resources projects would drop off as developments came online and the State moved to a production focus for its resources.
However the group said other sectors were showing signs of support for the State's economy.
Deloitte Access Economics WA Leader Matt Judkins said it was a case of the bigger they come, the harder they fall for the State.
"WA's construction boom has been very big, meaning the downside potential is too," he said.
"However timing is everything and the ability for the State to manage a transitioning economy depends on how the move from mining construction to production plays out and the speed with which other sectors of the economy pick up."
Deloitte Access Economics' Investment Monitor paints a picture of an investment landscape already in transition.
The total value of projects has continued to trend down, as project completions have outpaced the new developments coming on line. This leaves a $100 billion hole in the project pipeline.
"All of this translates to a weakening short term growth outlook for the WA economy," Mr Judkins said.
"With more of that slowdown is projected to fall into 2014-15 rather than 2013-14, the growth we forecast in September's Business Outlook for 2014-15 has been revised down to 1.1 per cent.
"But this is not the disaster it may seem, as the big driver is a shift in the timing of the capital expenditure slowdown, rather than any fundamental change.
"Our medium term forecasts for Gross State Product (GSP) growth remain above the Australian trend, and we still see WA rebounding quickly to growth of around four per cent and retaining the mantle of Australia's fastest growing state over the next decade."
Mr Judkins said in spite of the slowdown, there was still cause for optimism.
"While most of our economy is looking soft or at risk of softening, the State's housing construction sector is zigging at the time those other big drivers of growth are zagging," he said.
"It looks as if 2014 may be the peak year for the current housing construction cycle, but we see good gains extending into 2015 and 2016 as well.
"As we have noted in our recent Building the Lucky Country publication, Positioning for Prosperity: Catching the next wave, there are significant additional opportunities for WA to broaden its reliance away from the resources sector in the future, although nothing will replace the mining sector."
Deloitte Access Economics also said it saw growth in agriculture, tourism and international education.
