The Western Australian economy, like most other economies around the world, is beginning to be significantly affected by the COVID-19 pandemic. The Western Australian economy grew by 1 per cent in 2018‑19 and there were signs of growth in economic activity and employment in the early months of 2020. However, the health and safety measures to restrict the spread of COVID-19 will result in a downturn in the economy, the length and severity of which remains uncertain.
The initial effects have not been uniform across the economy. Fortunately for Western Australia, the mining industry has been relatively unaffected to date. Mining accounted for 36 per cent of Western Australia’s gross state product in 2018‑19 and accounts for the vast majority of the State’s exports and investment. The value of Western Australia’s merchandise exports rose 25 per cent to a record $182 billion in 2019, with iron ore exports ($96 billion) accounting for over half of the total. The mining industry will be pivotal to how the economy fares during the COVID‑19 pandemic and how quickly the economy can recover.
COVID‑19 is having the greatest effect on non-mining related services industries, such as tourism, international education, retail, transport and property services. The Government, in its effort to contain the spread of the virus, has had to restrict international travel to, and domestic travel within, the State, and require many non-essential service businesses to close. This will lead to significant job losses given most Western Australians are employed in services industries.
The outlook for business investment is much less certain than it was before the onset of COVID‑19. The fall in Western Australia’s business investment in 2018‑19 (down 7 per cent to $34.9 billion) was expected to be the last of the previous cycle, which peaked in 2012‑13. However, delays in investment decisions and slower progress on projects under construction will mean business investment in the coming year is lower than previously expected.
The Commonwealth and State Governments are providing unprecedented economic support through the COVID-19 crisis. Information on this support can be found here.
Economic statistics released by the Australian Bureau of Statistics over the next few months will begin to show the effects of COVID‑19. The WA Economic Profile will show some of these effects, such as monthly changes in the labour force, but it will not show others until aggregates for 2019-20 are available. A supplementary profile will be developed to capture more of the immediate effects of COVID-19 on the Western Australian economy.
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