Invest
WA headed for recession
Western Australia is braced for a recession, with the state’s Treasury baseline modelling indicating a “significant” economic shock before growth resumes in 2021-22.
WA headed for recession
Western Australia is braced for a recession, with the state’s Treasury baseline modelling indicating a “significant” economic shock before growth resumes in 2021-22.
In an update to Parliament, Western Australian Treasurer Ben Wyatt provided a preliminary assessment of the impacts of the COVID-19 pandemic on the state’s economy and finances.
Treasury baseline modelling has revealed that the state’s gross state product will contract by 5.1 per cent in the June quarter 2020, which will have the effect of reducing forecast growth to 0.7 per cent in the 2019-20 financial year.
A further 3.1 per cent contraction is expected in 2020-21.
If realised, this would fulfil the commonly held consensus definition of a recession, which is recognised as two consecutive quarters of economic decline.
A return to growth is expected in 2021-22, the Treasurer did reveal, despite conceding that “forecasts should be treated with caution given the high level of uncertainty of the depth and duration of the ongoing effects of COVID-19 on the state, national and international economies”.
Stating that there has never been any doubt that the impact of the crisis on the Western Australian economy and state finances would be severe, Mr Wyatt said the state “is not immune to the global economic shock caused by COVID-19, despite our strong health response to the pandemic”.
Treasury has indicated that royalty collections have remained relatively stable during the pandemic, but significant downturns are forecast across revenue sources such as GST grants, payroll tax, transfer duty, land tax and vehicle licence duty.
All in all, total general revenue over this financial year and next financial year is expected to be around $1.8 billion lower than was outlined in the 2019-20 mid-year review.
An increase in COVID-19 related expenditure and the reduced revenue will weigh heavily on the operating surplus of $2.6 billion that was also forecast.
Despite the grim forecast, economic recovery will be the main priority of Western Australia’s forthcoming budget.
“In the lead-up to the state budget in October, the McGowan government will be solely focused on growing the economy, and supporting WA businesses and jobs,” Mr Wyatt flagged.
He outlined that to date, “the McGowan government has committed $1.8 billion in support measures for households, small and medium businesses, community services and front-line service delivery agencies in response to the initial impacts of COVID-19”.
The economic recovery plan, which includes three key elements, is already underway.
Mr Wyatt said restrictions will progressively be eased in accordance with expert health advice that will allow businesses to reopen and people to get back to work safely, while targeted investments have already begun, which aim to restore the economy’s growth trajectory as quickly as possible.
“In addition, reforms will be made to cut red tape, lift our growth potential and strengthen our economy,” he concluded.
About the author
About the author
Economy
Australia’s exports rise to fourth-largest on record
The high price of iron ore has offset Chinese sanctions, with Australia recording its fourth-largest trade surplus on record, official figures have revealed. ...Read more
Economy
Coalition commits to climate resilience as new report bares shocking cost of inaction
Australia has announced that it is joining 118 countries in signing two global initiatives to plan for the risks associated with climate change, as a new report reveals the cost of extreme weather i...Read more
Economy
How CSIRO plans to turn landfills into a billion-dollar industry, tripling jobs
Australia’s national science agency is saving plastics, glass, paper and tyres from landfills and turning them into a billion-dollar industry that is set to triple in job creation, an official state...Read more
Economy
COVID consequences ‘will come home to roost’
Markets are enjoying an easy ride despite the economic damage wrought by COVID-19, but “there will be a reckoning”. ...Read more
Economy
Global economy predicted to pause before soaring in 2021
2021 will provide investors the opportunity to cash in on private markets and businesses hurt, but not permanently damaged, by the pandemic as accommodating policies and pent-up demand drive global gr...Read more
Economy
5 predictions for the Australian economy in 2021
The Australian economy is tipped to be one of five nations to outshine, with a win on the health front likely to act as tailwind, a new report has revealed. ...Read more
Economy
Deloitte calls vaccine a ‘game changer’ as 77% of Aussies welcome jab
As many as three-quarters of Aussies are willing to be vaccinated once a new coronavirus vaccine becomes publicly available, new research has revealed, as Deloitte Access Economics calls the vaccine ...Read more
Economy
Markets react to Biden’s stimulus package
The US markets have reacted negatively to President-elect Joe Biden’s US$1.9 trillion ($2.44 trillion) bailout proposal, amid mass job losses as the US continues to struggle with the COVID-19 pandem...Read more
Economy
Australia’s exports rise to fourth-largest on record
The high price of iron ore has offset Chinese sanctions, with Australia recording its fourth-largest trade surplus on record, official figures have revealed. ...Read more
Economy
Coalition commits to climate resilience as new report bares shocking cost of inaction
Australia has announced that it is joining 118 countries in signing two global initiatives to plan for the risks associated with climate change, as a new report reveals the cost of extreme weather i...Read more
Economy
How CSIRO plans to turn landfills into a billion-dollar industry, tripling jobs
Australia’s national science agency is saving plastics, glass, paper and tyres from landfills and turning them into a billion-dollar industry that is set to triple in job creation, an official state...Read more
Economy
COVID consequences ‘will come home to roost’
Markets are enjoying an easy ride despite the economic damage wrought by COVID-19, but “there will be a reckoning”. ...Read more
Economy
Global economy predicted to pause before soaring in 2021
2021 will provide investors the opportunity to cash in on private markets and businesses hurt, but not permanently damaged, by the pandemic as accommodating policies and pent-up demand drive global gr...Read more
Economy
5 predictions for the Australian economy in 2021
The Australian economy is tipped to be one of five nations to outshine, with a win on the health front likely to act as tailwind, a new report has revealed. ...Read more
Economy
Deloitte calls vaccine a ‘game changer’ as 77% of Aussies welcome jab
As many as three-quarters of Aussies are willing to be vaccinated once a new coronavirus vaccine becomes publicly available, new research has revealed, as Deloitte Access Economics calls the vaccine ...Read more
Economy
Markets react to Biden’s stimulus package
The US markets have reacted negatively to President-elect Joe Biden’s US$1.9 trillion ($2.44 trillion) bailout proposal, amid mass job losses as the US continues to struggle with the COVID-19 pandem...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
