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Category: Economic Trends / Government and Politics / Business, Economics and Finance

WA slips to bottom of economic performance ladder

Monday, 24 Oct 2016 07:55:09 | Eliza Laschon

The end of the mining boom is still hurting the state. (AAP: BHP Billiton)

Western Australia has fallen to last spot in the latest CommSec State of the States ranking, as the end of the mining boom continues to hit the state's economy hard.

Two years ago WA was at the top of the state economy ranking, but has steadily dropped since then, to finally fall to last spot behind Tasmania and Queensland.

The report takes into account eight key indicators: economic growth, retail spending, equipment investment, unemployment, construction work done, population growth, housing finance and dwelling commencements.

Commsec economist Savanth Sebastian said WA's economic performance reflected the end of the mining construction boom, but indicated some improvement was likely before too long.

"There's still some positives ... the income lift that will come in line with the record mining export and the recent lift in resource prices," Mr Sebastian said.

"The public-private infrastructure partnerships that are supporting the broader growth story is holding up retail sales relatively well in a relatively tough environment for Western Australia.

"It just highlights you go through these cycles and at the moment Western Australia is feeling a little bit of a tough time."

Retail sales holding up, employment weak

WA posted the second-weakest nominal annual growth rate, down 5.9 per cent on last year but spending was up by 10.7 per cent.

"You've got to take some heart from the fact that retail sales are holding up relatively well and it's just going to take some time for the transition phase to run through the WA economy," Mr Sebastian said.

One of the weakest indicators for WA was the rising unemployment figure.

"Unemployment in Western Australia is essentially about 40 per cent above its decade average," Mr Sebastian said.

"If you start to see much more, drive from the public sector, the Government, to support infrastructure and it can drum up further business confidence and should support the broader growth story over the medium term."

Mr Sebastian said the lift in commodity prices in the past six months was an encouraging trend.

"There was a lot of talk about the China bubble bursting last year and in fact it looks like if anything the Chinese economy is on a much more solid footing and that's certainly a very big positive for resource economies like WA," he said.

"While the big miners may not come back and invest in the sector immediately, the medium term suggests that investment will be required."

New South Wales has held onto its position of strongest-performing economy, followed by Victoria and the ACT.

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