CCIWA warns of growth slowdown
Treasurer Mike Nahan's job to repair the State Budget is getting even tougher with new forecasts the WA economy will slow over the next two years.
The Chamber of Commerce and Industry's quarterly update on the economy, to be released today, cuts expected growth which will directly affect the tax receipts needed to boost the State Budget.
_The West Australian _revealed yesterday that the new Treasurer faces a $420 million writedown of iron ore royalties and a freeze on advertising and public service appointments until July 1.
The chamber predicts the non- resources part of the WA economy will reassert itself to offset the expected drop-off in mining construction and development.
But it will not be enough to fully support the economy, which is now expected to grow about 4.5 per cent this financial year and next. In its last quarterly forecast, the chamber tipped growth of 5 per cent.
It would be a sizeable drop from the 5.1 per cent in 2012-13, which itself was well down on the 7.3 per cent growth the preceding year.
The slower growth will have its biggest impact on the Budget. Overall unemployment, while expected to rise marginally, should start to fall in 2014-15 to about 4.5 per cent.
Chamber chief economist John Nicolaou said there would be an inevitable impact on economic growth from the resources sector winding back investment. Though business investment was at its lowest level since December 2011, the outlook for WA was still positive.
"It is important to recognise that WA's economy - as measured by gross State product - was always going to moderate following such a significant boom," he said.
"However, the WA economy fundamentally remains very positive and the pick-up in other sectors will ensure the impact of scaling back in the resources sector will be modest by historic standards."
In its quarterly residential property survey released yesterday, the NAB said prices in WA were likely to come off a little further over the next 12 to 24 months.
Market players expect house prices to rise less than 3 per cent.
'It is important to recognise that WA's economy … was always going to moderate.' " CCI chief economist *John Nicolaou *
