The Western Australian economy is recovering from the effects of the COVID-19 pandemic. The domestic economy (state final demand) grew by 1.1 per cent in 2019‑20, despite contracting by 6.0 per cent in the June quarter. The WA Government State Budget estimates the entire economy (gross state product) grew by 2.0 per cent in 2019-20 and forecasts 1.25 per cent growth in 2020-21.

The resilience of Western Australia’s economy through the COVID-19 pandemic has been greatly assisted by continued mining production and commodity demand from the State’s major export markets. The value of mineral and petroleum exports in 2019‑20 was $173.7 billion – a record high – which has partly compensated for the loss of activity in other parts of the economy.

The COVID-19 pandemic has had the greatest effect on the tourism-related industries of accommodation, food, arts and recreation services; international education; and transport. Total employment fell by over 100,000 between February and May 2020. However, the easing of some restrictions, government support and increased domestic demand led to employment rising by over 75,000 between May and September. In particular, retail turnover is at record levels, which is supporting employment in the services sector. Employment growth looks set to continue in the coming months, with internet job vacancies reaching over 18,000 in September 2020, the highest level since October 2014 and 16 per cent higher than in September 2019. While employment prospects have improved, labour shortages are affecting parts of the economy that rely on overseas and interstate workers.

Western Australia’s business investment rose for the first time in 7 years in 2019-20, driven by the construction of major iron ore projects. The outlook for business investment is variable across sectors because of the differing effect COVID-19 has had on international commodity demand, as well as labour mobility, and equipment and materials supply within Western Australia. Slower construction of lithium projects in 2019-20 will see greater than expected capital expenditure in the coming year. Higher gold and nickel prices are likely to attract investment into these industries. However, the outlook for investment in the oil and gas sector – which accounts for a large share of potential business investment in coming years – is much more uncertain, as evidenced by delays in investment decisions on major LNG projects.

The WA Government released the WA Recovery Plan on 26 July 2020 to assist the State’s economy return to its pre‑pandemic growth trajectory as quickly as possible. The WA Recovery Plan is structured around 21 priority streams and outlines the economic support the WA Government has provided during the COVID-19 pandemic and its priorities for the economic recovery.

The WA Government’s initial economic support targeted industries most affected by the COVID‑19 pandemic, such as providing funding to secure regional air services, grants to small tourism operators and marketing campaigns to encourage locals to holiday in Western Australia. This has provided support for tourism businesses across the State in the absence of interstate and international visitors. Support for the housing industry from both the WA Government’s housing stimulus package and the Australian Government’s Homebuilder Scheme has led to both housing finance and building approvals rising significantly. The value of housing finance commitments rose 31 per cent and the number of dwelling approvals rose 24 per cent between June and August 2020.

The WA Recovery Plan also includes actions to deliver long‑term objectives such as investing in renewable energy and new technologies, building community infrastructure and unlocking barriers to investment. It also provides support to help industries adapt, including funding to develop the WA International Education Recovery and Renewal Plan to promote Western Australia’s competitive advantages offshore, establish innovative alternative delivery models and implement programs and activities to support international students onshore.

A supplementary WA Economic Profile is available on the Department of Jobs, Tourism, Science and Innovation’s website, which captures the immediate effects of COVID-19 on the Western Australian economy.

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