On December 19, the State Government released the Mid-year Review, their update on the economy and the budget position.
The 2023-24 surplus is now forecast to reach $3.7 billion, up from $3.3 billion in May’s budget, off the back of a strong domestic economy and the high iron ore price.
Major new initiatives announced over the forward estimates include:
- $2.8 billion for the Alkimos Seawater Desalination Plant
- $2.8 billion provision for public sector wages
- $700 million to upgrade the electricity network
- $626 million for the health system
The domestic economy has been far more robust than forecast with State Final Demand now expected to grow 4.5% in 2023-24, up from the Budget’s forecast of 3.0%. Despite this, Gross State Product is expected to grow a modest 1.75% in 2023-24, as export volumes of grain and LNG ease from last year’s record highs and weigh on the economy. With employment growth (+2.5%) expected to match the high population growth (+2.4%) in 2023-24, the labour market is expected to remain tight with the unemployment forecast to remain at 3.75% with wages to grow 4.25%. Looking forward there are considerable risks to the forecast, including a global economic slowdown, geopolitical conflicts and WA’s reliance on the mining sector and global commodity markets.
The Federal Government also released their Mid-Year Economic and Fiscal Outlook which forecast a small budget deficit in 2023-24 of $1.1 billion, in from the $13.9 billion deficit forecast in the May Budget. In the coming years, inflation is expected to continue to fall, reaching 2.75% in June 2025. However economic growth is expected to remain sluggish at 1.75% in 2023-24 and increasing gradually over the forward estimates.
