ECONOMIC recovery after the COVID-19 pandemic appears faster in Western Australia than nationally, but a second wave remains the biggest threat, agricultural consultants have been told.
WA Treasury's director of economic and revenue forecasting David Christmas, principal speaker at the Australian Association of Agricultural Consultants WA annual Outlook conference, gave more than 160 members and associates a snapshot of the State's economic recovery.
Scenario forecasting as part of contingency planning for a possible second wave of community transmission of the virus predicted a six-week lockdown would likely reduce WA's domestic economy by $5.6 billion, Mr Christmas told the audience.
He said it would also likely slash $3.3b from Gross State Product (GSP) and put about 30,300 people out of work.
Even without a second wave, "significant disruptions (to the economy) as extraordinary levels of economic stimulus are unwound," were expected, Mr Christmas indicated.
He said global threats to WA's economic recovery included the critical timing of "effective health solutions".
"Numerous COVID-19 vaccines are under development but effectiveness and development timelines are uncertain," Mr Christmas said.
Unwinding of global stimulus measures, the scale and speed of China's stimulus and geopolitical situations were all risks to WA's recovery beyond State government control, he said.
Mr Christmas said, COVID-19 had resulted in the biggest economic contraction since World War II and continued to "challenge" advanced and emerging economies around the world.
He said it had significant impact on the WA economy, with household consumption falling by a record 10.6 per cent in the June quarter and the domestic economy contracting by 6pc.
But Mr Christmas pointed out WA's economy has proved "more resilient than most", reflected by earlier easing of restrictions and the structure of the economy.
Despite the June quarter contraction - smaller than New South Wales' at -8.6pc, Victoria's -8.5pc and Tasmania's -7.4pc - WA's domestic economy grew by 1.1pc over the 2019-20 financial year, he said.
He said it was the only State economy to grow last financial year, led primarily by mining investment, household consumption, net exports - in which agriculture played a role - and mining outputs.
Consumer and business confidence has been stronger in WA than nationally for most of the period since February and indicators are now back in "positive territory", he said.
The audience heard WA's controversial hard border had a role in restoring confidence.
"It's important to realise confidence drives activity," Mr Christmas said.
"Our hard border allowed our community to reopen faster because it contributed to increased community confidence any spread of the virus from interstate was adequately prevented."
He said in WA improved consumer confidence and government stimulus have flowed through to strong growth in retail spending, with retail trade growing by 7.5pc in August - the strongest growth in seven years.
Business investment grew for the first time in seven years in 2019-20 and Mr Christmas said while growth was expected to moderate this financial year, business investment was projected to continue to grow through to 2023-24.
The overall level of exports has remained "relatively robust" through 2020, although there have been "challenges for some commodities", he said.
Australian Bureau of Agricultural and Resource Economics and Sciences is forecasting a rebound in WA's winter crop in 2020-21 after a significant decline in 2019-20, while Australian Bureau of Statistics data shows agricultural exports have come off record levels but remain high.
The annual rolling value of WA wheat, canola, meat and live animal, fish and crustacean and wool exports exceeded $6b in August and all other agricultural exports, excluding barley, took the August total to about $7.5b - its lowest level since December 2018.
While monthly value of agrifood exports through 2020 has been lower than record levels through 2019, the within-year pattern and level of exports so far is broadly similar to previous years despite the pandemic's impact on trade, Mr Christmas said.
The value of sea freight - which accounts for about 90pc of agrifood exports - has held up reasonably well, he said, but air freight has dropped significantly and, while recovering from lows of February-April, it remains well below recent year levels.
Mr Christmas said WA's economy was forecast to grow by 1.25pc this financial year, down from the mid-year review estimate of 2.5pc, with unemployment expected to average 8pc over 2020-21.
In WA the domestic economy is expected to be the primary driver of growth over the forward estimates period until 2023-24, although net exports are expected to remain at high levels, he said.
