The WA economy has been resilient in the face of the negative effects from higher interest rates and global economic uncertainty by continuing to grow strongly, according to Chamber of Commerce and Industry Western Australia (CCI) chief economist John Nicolaou.
The latest WA Economic Compass report released by CCI has found that that capacity building by business was again the primary driver of economic activity in the state, accounting for 90% of growth in the economy during the March quarter, and around half of domestic economic growth over the year.
A record $34.1 billion was invested by business in WA over the year to March 2008.
According to Nicolaou, despite these falls, WA’s domestic economy grew by nearly 7% over the year to March, and remains a key driver of the national economy, accounting for almost 20% of total domestic output.
“Across the nation, the pace of economic growth has slowed in recent times,” he said.
“The national economy, as measured by Gross Domestic Product (GDP) grew by 0.6% during the March quarter of 2008, the smallest quarterly increase in two years. Over the year, GDP expanded by 3.6%.
“Over the quarter, the volume of exports from WA surged 5.8%, with exports now 8.1% higher over the year to March.”
According to the report, the CCI remains very optimistic about the prospects for the WA economy.
Such a positive outlook will mean that labour market conditions will remain tight, with the unemployment rate likely to remain at current historic lows and record high levels of labour force participation, according to Nicolaou.
“Strong population migration from interstate and overseas will help to ease the supply constraints associated with an economy that is already close to full employment,” he said.