WA risks becoming a victim of its own success, as our runaway economy continues to outstrip the nation and hurt other states. High world demand for raw materials such as iron ore, copper and nickel are great news for resource-rich WA, but our strong dollar is harming traditional manufacturing bases in the eastern states. And WA's high wages growth and low unemployment rate are draining skilled labour from the rest of Australia and fuelling WA's booming property market – which has thumbed its nose at negative-equity home-owners in New South Wales and Victoria. According to the latest National Australia Bank and local Chamber of Commerce and Industry figures, WA is still punching way above its economic weight. GDP per capita is $46,261 a year – the second-highest after the Northern Territory ($49,311), and well ahead of NSW ($43,400) and Victoria ($43,008). WA's forecast economic growth this financial year is 4 to 5 per cent, according to the NAB – almost double NSW and Victoria's 2.5 to 3.5 per cent. The CCI is tipping even higher growth for WA of 6.75 per cent, falling slightly to 6.5 per cent for 2006-7. WA's 4.2 per cent jobless rate is lower than any state except the Australian Capital Territory – and well below the 5.2 per cent national average. According to the CCI, demand for raw materials is expected to push WA exports up 7.25 per cent this year, while Victoria will be worst hit with forecast negative growth of 5 to 7 per cent. Victoria, more than any other state, has been hurt by the strong dollar and shift to cheaper manufacturing bases outside Australia. WA, on the other hand, has seen a leap in business investment of almost 30 per cent year-on-year in the last quarter, compared with less than 5 per cent in Victoria and 1.5 per cent in NSW. "The two big drivers (in WA) over the next financial year are going to be exports and business investment," CCI economist Noel Richards said. "We're accounting for about one third of (Australian) exports – so we're certainly punching above our weight there – and that's probably expected to increase. "High commodity prices and higher output from the resources sector should kick in and see exports take off in the next couple of years. "As a result, we expect business investment to rise 12.5 per cent for all of 2005-06. "Business investment is already at a high level in WA, so that's a pretty strong figure." The rise in business investment is also being backed by WA's population growth. According to NAB figures, WA grew 1.6 per cent by the end of 2004-05 – double the national average of 0.7 per cent. Queensland was still most popular among interstate migrants, growing by about 7500 people in the last quarter of last financial year, but WA and the NT were the only other states not to post a decline. "Because the jobs market here is so strong it probably is attracting a lot more labour from interstate and overseas," Mr Richards said. "That is expected to lend some strength to the housing market. We've forecast dwelling investment growth of about 4.25 per cent in 2005-06." He said China was behind WA's success and dismissed fears that the lagging eastern states could disrupt our economy. "We're well supported, particularly by the mining sector – it's very much internationally focused," he said. "Barring anything unforeseen (in China or the US), we're going to see pretty solid growth over the next couple of years."
While WA accounts for only 11 per cent of Australia's gross domestic product, our booming resources sector is underpinning a strong Australian dollar and over-reliance on record-high commodities prices.
High world demand for raw materials such as iron ore, copper and nickel are great news for resource-rich WA, but our strong dollar is harming traditional manufacturing bases in the eastern states.
And WA's high wages growth and low unemployment rate are draining skilled labour from the rest of Australia and fuelling WA's booming property market – which has thumbed its nose at negative-equity home-owners in New South Wales and Victoria.
According to the latest National Australia Bank and local Chamber of Commerce and Industry figures, WA is still punching way above its economic weight.
GDP per capita is $46,261 a year – the second-highest after the Northern Territory ($49,311), and well ahead of NSW ($43,400) and Victoria ($43,008).
WA's forecast economic growth this financial year is 4 to 5 per cent, according to the NAB – almost double NSW and Victoria's 2.5 to 3.5 per cent.
The CCI is tipping even higher growth for WA of 6.75 per cent, falling slightly to 6.5 per cent for 2006-7.
WA's 4.2 per cent jobless rate is lower than any state except the Australian Capital Territory – and well below the 5.2 per cent national average.
According to the CCI, demand for raw materials is expected to push WA exports up 7.25 per cent this year, while Victoria will be worst hit with forecast negative growth of 5 to 7 per cent. Victoria, more than any other state, has been hurt by the strong dollar and shift to cheaper manufacturing bases outside Australia.
WA, on the other hand, has seen a leap in business investment of almost 30 per cent year-on-year in the last quarter, compared with less than 5 per cent in Victoria and 1.5 per cent in NSW.
"The two big drivers (in WA) over the next financial year are going to be exports and business investment," CCI economist Noel Richards said.
"We're accounting for about one third of (Australian) exports – so we're certainly punching above our weight there – and that's probably expected to increase.
"High commodity prices and higher output from the resources sector should kick in and see exports take off in the next couple of years.
"As a result, we expect business investment to rise 12.5 per cent for all of 2005-06.
"Business investment is already at a high level in WA, so that's a pretty strong figure."
The rise in business investment is also being backed by WA's population growth.
According to NAB figures, WA grew 1.6 per cent by the end of 2004-05 – double the national average of 0.7 per cent.
Queensland was still most popular among interstate migrants, growing by about 7500 people in the last quarter of last financial year, but WA and the NT were the only other states not to post a decline.
"Because the jobs market here is so strong it probably is attracting a lot more labour from interstate and overseas," Mr Richards said.
"That is expected to lend some strength to the housing market. We've forecast dwelling investment growth of about 4.25 per cent in 2005-06."
He said China was behind WA's success and dismissed fears that the lagging eastern states could disrupt our economy.
"We're well supported, particularly by the mining sector – it's very much internationally focused," he said.
"Barring anything unforeseen (in China or the US), we're going to see pretty solid growth over the next couple of years."
