The Western Australian economy, like most other economies around the world, is being significantly affected by the COVID-19 pandemic. The Western Australian economy grew by 1 per cent in 2018‑19 and there were signs of further economic and employment growth in the early months of 2020. However, the health and safety measures to reduce the spread of COVID‑19 has resulted in a downturn in the economy, the length and severity of which remains uncertain.
The effects of COVID-19 have not been uniform across the economy. Fortunately for Western Australia, mining industry output has been relatively unaffected. Mining accounted for 36 per cent of Western Australia’s gross state product in 2018‑19 and accounts for the majority of the State’s exports and investment. The mining industry has supported the economy through the COVID‑19 pandemic and will be pivotal in its recovery. In March 2020, the value of Western Australia’s merchandise exports reached a monthly record of $17.9 billion, including $8.8 billion of iron ore exports. While supply out of Western Australia has continued largely unabated, sustaining export values will largely depend on demand from the State’s major and emerging export markets.
The COVID‑19 pandemic is having the greatest effect on non-mining related services industries, such as tourism; international education; cafes, restaurants and takeaway food retailing; clothing, footwear and personal accessory retailing; transport; and property services. The WA Government, in its effort to contain the spread of the virus, restricted travel to and around the State and required some businesses providing non-essential services to reduce operations or close temporarily. This led to significant job losses given most Western Australians are employed in services industries. Total employment in Western Australia fell by 62,301 in April 2020. However, Western Australia’s success in containing the spread of COVID-19 has meant restrictions on travel around the State and on some services businesses have started to ease. This will help people return to employment in the coming months.
The outlook for business investment is much less certain than it was before the onset of the COVID‑19 pandemic. 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 forecast recovery in dwelling investment prior to COVID-19 will also be significantly challenged by reduced employment, incomes and overseas migration.
The Australian and WA Governments are providing economic support through the COVID-19 pandemic. Information on this support can be found here.
Economic statistics released by the Australian Bureau of Statistics are beginning to show the effects of the COVID‑19 pandemic. The WA Economic Profile shows some of these effects, such as monthly changes in the labour force, but it will not show others until aggregates for 2019-20 (or even later) are available. A supplementary profile has been developed to capture more of the immediate effects of COVID-19 on the Western Australian economy and is available on the Department of Jobs, Tourism, Science and Innovation’s web site.
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