No. 3 - Department of Treasury - The Western Australian Government

2006 No.3 Western Australian Economic SummaryFurthermore, while conditions in the housing market are detracting fromgrowth in the United States, business conditions are robust. The recent fall inpetrol prices and tight labour market appear to be supporting growth inspending and reducing the effect of the housing downturn.A risk to the Western Australian economy is that any slowing in economicgrowth in the United States could reduce its demand for Chinese exports(and hence Chinese demand for Western Australian resources exports). Forthe time being, however, China’s growth is very strong. Growth in realGross Domestic Product was reported at 10.4% between the Septemberquarters of 2005 and 2006, down slightly from the 11.3% recorded in the fourquarters to June 2006. China’s structural problems still pose significant risksover the medium term (for more information on the nature of these risks seefeature article “China: An Economic and Structural Outlook” in theDepartment of Treasury and Finance’s Summer-Autumn 2006 EconomicSummary).In Western Australia’s other main trading partner, Japan, GDP increased by2.5% over the year to the June quarter 2006. While this may seem low in thecontext of growth rates for other countries, this is 1.2 percentage pointshigher than Japan’s average growth rate of 1.3% over the past ten years.Private final domestic demand is growing at a solid pace, while private fixedinvestment is buoyant, underpinned by profits and a turnaround in bankcredit. The IMF predicts growth in Japan to be 2.7% for the 2006 calendaryear.Department of Treasury and Finance 53