WA economy faces tough ride

WA's economy faces its toughest period in more than a decade, with growing fears there are no new major projects to prop up the State.

A Deloitte Access Economics report out today warns there appears nothing set to replace big-ticket building projects such as the $54 billion Gorgon gas plant or the $3 billion Perth City Link.

In a sign of the trouble facing the State Government as it prepares its upcoming Budget, Deloitte Access believes unemployment across WA will rise to 6.5 per cent over the coming year.

The State economy will slow to levels not seen since 2000-01, private consumption will contract and private spending on engineering and construction will slip more than 20 per cent, it says.

Deloitte Access director Chris Richardson said WA still had potential in areas such as gas, tourism, education and agribusiness. But potential "doesn't cut it", given the immediate financial pressures facing the State because of a slowdown in resources and overall major projects.

Mr Richardson said there appeared a diminishing pipeline of public and private construction that, if not replenished, would leave the State facing a tougher economic period.

"The big question is what comes after the latest list of projects is completed, with the total value of projects in the State's commercial construction pipeline well below the value of those projects that are under way," he said. "That says a period of contraction lies ahead."

Mr Richardson said Federal Treasurer Joe Hockey also faced issues, with the fall in commodity prices and low wages growth eating into revenues.

Although the Abbott Government had tried to trim some spending, the fall in revenue would be even bigger.

A separate report to be released today by CommSec shows WA remains the third strongest State or Territory in the Commonwealth.

Overall economic growth, retail trade and construction are driving the State's economy.

But WA is now the nation's weakest in terms of employment which, if the trend continues, will drag down the State's rating.

CommSec chief economist Craig James said the slowdown in mining was now an opportunity for diversification.