No. 3 - Department of Treasury - The Western Australian Government
No. 3 - Department of Treasury - The Western Australian Government
No. 3 - Department of Treasury - The Western Australian Government
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<strong>Western</strong> <strong>Australian</strong> Economic Summary2006 <strong>No</strong>.3Perth’s consumer inflation is likely to ease in the near future as fruit and fuelprices ease, and will decelerate further if house price growth slows.<strong>The</strong> outlook for the world economy in the short to medium term is fairlyrobust 1 , but Australia’s commodity prices have levelled <strong>of</strong>f in recentmonths, and global commodity prices are expected to s<strong>of</strong>ten over the nextfew years 2 .Production <strong>of</strong> a number <strong>of</strong> the State’s key resource commodities is likely toincrease as the strong investment <strong>of</strong> recent years (both in <strong>Western</strong> Australiaand globally) raises capacity. <strong>The</strong> IMF 3 and World Bank 4 predict that priceswill remain above historical averages rather than dropping to pre-boomlevels. Falling prices could lead to some easing in mining investment in<strong>Western</strong> Australia, although this will be modest if demand is still robust andprices stay above historical averages 5 .Current and future trends in commodity prices, and their relationship toproductivity and welfare in <strong>Western</strong> Australia’ s economy, are discussed inthis publication’s first feature article on page 54.<strong>The</strong> second feature article on page 75 discusses the use <strong>of</strong> ComputableGeneral Equilibrium Models for major project assistance analysis.State Accounts 2005-06<strong>Western</strong> Australia’s real Gross State Product (GSP) rose by 4.9% in 2005-06.<strong>The</strong> GSP growth estimate for the previous year has been revised to 4.7%, upfrom an initial estimate <strong>of</strong> GSP growth in 2004-05 rate <strong>of</strong> 2.7% published in<strong>No</strong>vember 2005.Growth <strong>of</strong> 10.9% in State Final Demand over 2005-06 was largely driven bybusiness investment (up 37%, and contributing 6.1 percentage points togrowth) and household consumption (up 3.9% and contributing1.9 percentage points to growth).1 <strong>The</strong> International Monetary Fund has noted generally buoyant global economicconditions in its World Economic Outlook (September 2006 edition), with above-trendglobal economic growth forecast <strong>of</strong> 5.1% in 2006 and <strong>of</strong> 4.9% in 2007.2 Access Economics September quarter 2006 Minerals Monitor (the Monitor providesan outline <strong>of</strong> the views and consensus forecasts <strong>of</strong> 11 resource commoditiesforecasters). Also see next two footnotes below.3 Australia: Selected Issues. IMF Country Report <strong>No</strong>. 06/373, October 2006.pp. 26-374World Bank Group (Oil, Gas, Mining and Chemicals <strong>Department</strong>). 2006.Background Paper: <strong>The</strong> Outlook for Metals Markets; Prepared for G20 DeputiesMeeting Sydney 2006. World Bank. Washington. p.ii5 For more information on this and other possible risks to growth, see “Risks to theoutlook” section at the end <strong>of</strong> this chapter.2 <strong>Department</strong> <strong>of</strong> <strong>Treasury</strong> and Finance