The Western Australian economy has been affected by the COVID-19 pandemic, but is now in a relatively strong position for recovery. Over the 2019-20 financial year, Western Australia’s domestic economy (state final demand) grew by 1.1 per cent and the WA Government State Budget 2020-21 forecasts real gross state product growth of 2.0 per cent in 2019-20 and 1.25 per cent in 2020-21.
The effects of COVID-19 have not been uniform across the economy. Mining industry output has been relatively unaffected, which for Western Australia has been important given that it accounted for 36 per cent of gross state product in 2018-19 and the majority of export revenue and investment expenditure. The resources industry had record sales of $172 billion and record average employment of 135,000 in 2019-20. While exports have continued largely unabated, sustaining export values will largely depend on international demand and prices.
The COVID 19 pandemic has had the greatest effect on tourism-related industries of accommodation, food, arts and recreation services; international education; and transport. Government imposed restrictions on travel and non-essential services to contain the spread of the virus led to significant job losses. Total employment fell by over 100,000 between February and May 2020. However, the easing of some restrictions and increased domestic demand led to employment rising by over 70,000 between May and August. Employment growth looks set to continue in the coming months, with internet job vacancies reaching over 17,000 in August 2020, the highest level since October 2014. While employment prospects have improved in Western Australia, labour shortages are effecting the parts of the economy that rely on overseas and interstate workers.
Major iron ore project construction resulted in business investment rising for the first time in 7 years in 2019-20. The effects of the COVID 19 pandemic on international demand, labour mobility and equipment and materials supply means the outlook for business investment is variable across sectors. Slower progress on lithium projects under construction in 2019-20 will see greater than expected capital expenditure in the coming year, while higher gold and nickel prices are likely to support investment in these sectors. However, the outlook for investment in the oil and gas sector – which accounts for a large share of potential business investment in coming years – is much more uncertain, as evidenced by delays in investment decisions on major LNG projects.
The WA Government’s housing stimulus package and the Australian Government’s Homebuilder Scheme are providing support to dwelling investment in Western Australia, with both housing finance commitments and building approvals rising significantly since the measures were introduced in June 2020.
The WA Government released the WA Recovery Plan on 26 July 2020. The WA Recovery Plan outlines the economic support the WA Government has provided during the COVID-19 pandemic and its priorities for the economic recovery.
A supplementary WA Economic Profile is also available on the Department of Jobs, Tourism, Science and Innovation’s website, which captures the immediate effects of COVID-19 on the Western Australian economy.
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