Resilient WA consumer sentiment not enough to counteract forecast decline in exports in 2023-24: Deloitte
WA’s economic growth is set to take a hit this financial year thanks to an expected slump in demand for the State’s exports, despite stronger consumer demand than elsewhere in the nation.
But analysts are increasingly confident — despite the retail and per capita recessions already coming to bear — Australia will manage to avoid tipping into a full recession.
A forecast hike in electricity prices of between 20 to 25 per cent is expected in all States and Territories bar WA given it is not part of the national energy market. The State Government has fixed increases in WA to 2.5 per cent this financial year, which the latest forecasts from Deloitte Access Economics suggest will largely shield consumers’ hip pockets and fuel higher spending on non-essential items.
In forecasts released late on Tuesday, Deloitte economists noted WA household consumption was the highest in the nation in the three months to June, increasing at 0.8 per cent compared to just 0.1 per cent nationally.
“Spending increased in areas of discretionary consumption that declined in almost every other jurisdiction, including recreation, dining out … and clothing and footwear,” author David Rumbens said.
Deloitte expects WA to sustain the highest growth of household demand into this financial year, at 1.5 per cent compared to 0.8 per cent nationally. The State’s business investment is also at its highest level since late 2016-17.
But tempering growth overall for the State is an anticipated slide in exports. Mr Rumbens said strong grain and ore production and exports last year was unlikely to be matched.
“From this high point, a normalisation of export volumes … is expected to detract from overall economic growth, in combination with a continued recovery in imports of goods and services from pandemic-era lows,” he said.
Nationally, Mr Rumbens said businesses should look to the 2024 calendar year as one that provided growth opportunities — thereby avoiding a full technical recession.
“The business cycle will soon be past its low point and start turning up again,” he said. “Real wages will start rising in late 2023, and strong population growth provides foundational support.”
The spread of artificial intelligence and the net zero transition would also provide significant prospects for businesses, he said.
Treasurer Jim Chalmers said it was inevitable global instability would weigh on Australia’s economy.
“Recent tensions in the Middle East have added to the uncertainty in global oil markets, with supply constraints from overseas causing higher fuel prices here at home,” he said.
“The struggling property sector in China, high inflation and higher interest rates are all weighing on the global economy and will inevitably see growth slow and the unemployment rate tick up here at home.”
Source: News
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