The Western Australian economy grew by 1.9 per cent in 2017-18, following six years of declining growth that ended in a contraction of 1.8 per cent in 2016-17. The slowdown in the economy was mainly due to the completion of major LNG projects, halving the value of business investment. This led to total employment falling in both 2015‑16 and 2016‑17. A small increase in business investment in 2017‑18 and an improved investment outlook is now supporting jobs growth. To sustain this, activity will need to broaden across a range of sectors in the economy.
Western Australia is a highly‑competitive exporter of minerals and petroleum commodities and the mining industry accounted for 30 per cent of gross state product in 2017‑18. Minerals and petroleum investment is likely to increase in coming years, as major mining companies made commitments to several new projects in 2017‑18. These include Stage 2 of the Gorgon LNG project, BHP’s South Flank iron ore project, Fortescue Metals Group’s Eliwana iron ore project, the second stage of Tianqi’s lithium processing facility at Kwinana and Rio Tinto’s Koodaideri iron ore project. Investments in a range of major new gas projects are under consideration to backfill, or possibly expand, existing LNG facilities. Further, minerals exploration expenditure grew by 16 per cent in 2017‑18, mainly in gold and nickel/cobalt.
The mining industry has driven the economy during recent years, with investment in new productive capacity over the past decade leading to increased export volumes. Growth in mining exports is likely to decline in coming years, as LNG projects ramp up to full capacity and China’s demand for iron ore reduces. Greater contributions from domestically‑focused and non-mining export industries will be needed to sustain Western Australia’s economic growth in the future. A broadening of economic activity will also help reduce the reliance on the mining and public sector industries to drive jobs growth.
Western Australia’s main trading partner – China – is moving to more consumption‑led economic growth, with rising demand for high quality agricultural products, tourism and international education services. Western Australia is yet to take full advantage of China’s growing demand for tourism and international education services, as much as other Australian states, with real services exports falling in each of the past three years.
Exporters need to engage new customers and develop their markets throughout Asia, as countries in the region move through different stages of development. More advanced economies offer opportunities for trade in new, higher-value products and services, while economies at earlier stages of development present opportunities for trade in minerals, petroleum, bulk agricultural products and manufactured goods.
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