WA Premier, Colin Barnett, has downplayed the latest national accounts data showing the state’s economy suffered its biggest contraction since 1989. From The AFR:
Western Australia’s economy has suffered its second largest contraction on record but a defiant Premier Colin Barnett has insisted conditions are improving.
Figures from the Australian Bureau of Statistics show Western Australia’s state final demand plunged 3.8 per cent in the September quarter, a fall far larger than any other state or territory and comes after the local economy shrunk 2.7 per cent in the June quarter.
It is the worst result since 1989.Mr Barnett said state final demand, which excludes exports, was a poor figure to use to judge the state’s economic performance.
“It really doesn’t tell you anything about Western Australia because this economy is an export orientated economy,” Mr Barnett said. “If you take exports out of the equation you are going to get a poor result.”
The below charts, which track WA final demand in trend terms, summarises the situation.
In the September quarter, WA final demand contracted by 2.8%, whereas in the year to September it contracted a whopping 8.7%:
However, Barnett is correct when he says that WA’s gross state product (GSP), which includes net exports, paints a different picture. This measure is calculated by the ABS annually and is current to June 2016. It shows that WA’s economy grew by 1.9% in the 2016 financial year:
That said, state final demand is the better measure of economic health because it measures spending in the economy, along with gross fixed capital formation. By contrast, GSP includes export volumes, which doesn’t mean a whole lot to the domestic economy or the ordinary citizens and businesses of WA.
It is also worth pointing out that the annual state accounts reported a huge 5.3% fall in real gross state income in WA over the 2016 financial year:
For all intents and purposes, the WA economy has contracted sharply, and no amount of turd polishing by Colin Barnett can change this fact.
