The Western Australian economy, like most other economies around the world, is being significantly affected by the COVID-19 pandemic. The Western Australian economy grew by 1 per cent in 2018‑19 and there were signs of further economic and employment growth in the early months of 2020. However, the health and safety measures to reduce the spread of COVID‑19 has resulted in a downturn in the economy, the length and severity of which remains uncertain.
The effects of COVID-19 have not been uniform across the economy. Fortunately for Western Australia, mining industry output has been relatively unaffected. Mining accounted for 36 per cent of Western Australia’s gross state product in 2018‑19 and accounts for the majority of the State’s exports and investment. In March 2020, the value of Western Australia’s merchandise exports reached a monthly record of $17.6 billion, including $9.0 billion of iron ore exports. While supply out of Western Australia has continued largely unabated, sustaining export values will largely depend on demand from the State’s major and emerging export markets.
The COVID‑19 pandemic is having the greatest effect on non-mining related services industries, such as tourism; international education; food and beverage services; retail trade; and transport. The WA Government, in its effort to contain the spread of the virus, restricted travel to and around the State and required some businesses providing non-essential services to reduce operations or close temporarily. This led to significant job losses given most Western Australians are employed in services industries. Total employment in Western Australia fell by over 100,000 between February and May 2020. However, Western Australia’s success in containing the spread of COVID-19 has meant restrictions have eased on travel around the State and on the way businesses provide services, which saw employment rise by over 22,000 in June.
The outlook for business investment is much less certain than it was before the onset of the COVID‑19 pandemic. The fall in Western Australia’s business investment in 2018‑19 (down 7 per cent to $34.9 billion) was expected to be the last of the previous cycle, which peaked in 2012‑13. However, delays in investment decisions and slower progress on projects under construction will mean business investment in the coming year is lower than previously expected. The WA Government’s $444 million housing stimulus package and the Australian Government’s Homebuilder Scheme will provide much needed support to dwelling investment in the coming year, as residential construction activity is significantly challenged by reduced employment, incomes and overseas migration.
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 now available on the Department of Jobs, Tourism, Science and Innovation’s web site, which captures the immediate effects of COVID-19 on the Western Australian economy.
Please contact Mike Thomas for editorial inquiries or subscribe to the monthly economic profile updates.