HOUSEHOLD spending and confidence will lead WA’s economic recovery according to a new report by the Chamber of Commerce and Industry WA (CCI).
The organisation has just released ‘Outlook’, its biannual forecast for the WA economy, predicting how the state’s economy will perform for the next three years.
The report tipped WA’s economy will grow by 1.3 per cent this year, up from 0.9 per cent previously forecast.
“This growth has been driven by household consumption, which has found renewed strength this year, continued export growth and stable business investment,” CCI Chief Economist Rick Newnham said.
“Household consumption is currently growing at 1.5 per cent, in annual terms – the fastest growth since December 2014 – approaching $110 billion per year.
“This is an important indicator of revitalisation in the economy, with household consumption contributing to over 50 per cent of domestic economy activity.
“Cost-of-living pressures and household budget constraints still remain, but discretionary spending is showing signs of life again, particularly on hotels, cafes and restaurants (3.2 per cent growth) and recreation and culture (1.2 per cent growth).
“This reflects CCI’s latest Survey of Consumer Confidence which identified that confidence is at a four-year high, but cost of living factors such as groceries, utilities, and transport continue to be the biggest influence of concern to consumers.”
Western Australia’s falling business investment has now bottomed out, with CCI forecasting a return to growth in 2018-19 of 3 per cent.
“This is a stark difference to two years ago when business investment was falling at its fastest rate since the start of the decade, falling 28 per cent – confirming that the WA economy has now reached a turning point,” Mr Newnham said.