The $50 billion Gorgon liquefied natural gas project will be a boon for the state, but Western Australia has not escaped unscathed from the global financial crisis, according to Access Economics.
The $50 billion Gorgon liquefied natural gas project will be a boon for the state, but Western Australia has not escaped unscathed from the global financial crisis, according to Access Economics.
The economic forecaster's Business Outlook report, released today, reveals that while the go-ahead for the Gorgon LNG project located on Barrow Island off the mid north coast came at an ideal time, the state's jobs and retail sales decelerated faster than elsewhere in Australia as the crisis hit.
Access Economics director Chris Richardson said Gorgon was a reminder that crises come and go, whereas the demand to feed industrial developments in Asia "will be with us for many decades to come".
"With little more than 10 per cent of the nation's population, Western Australia accounts for more than a third of Australia's exports and almost half of the engineering construction work in the nation as a whole," he said.
"That stunning ability to punch above its weight on exports and engineering comes down to its amazing resource riches and the rising value that the world places on them.
"After all, the go ahead for Gorgon may not mean that Western Australia has escaped
unscathed from the global financial crisis, but it is a reminder that crises come and go, while the demand to feed industrial developments in Asia will be with us for many decades ahead.
"The flipside to that potential is that it makes Western Australia rather more dependent on the world than it is on the rest of Australia. WA is benefiting from some important Australian positives, including the stimulus seen of late.
"But you'd have thought that the worst year in the global economy since the Great Depression might have punched a bigger hole in Western Australia's business cycle than is showing."
Mr Richardson said export sales to the US and UK were down by two-thirds over the past year, and that WA's exports sales to Japan were down by one-third, although sales to India doubled in the past year alone, while export earnings from China rose by 10 per cent despite big falls in the iron ore contract price.
The Gorgon project is expected to generate 10,000 construction jobs alone, a sign of the longer term positives the state is yet to enjoy.
However Mr Richardson said important risks do lie ahead.
"We don't think that WA is out of the woods, with the rising risk of China's commodity purchases falling away in 2011, and perhaps taking down commodity prices at the same time," he said.
"But as a longer term story...Western Australia remains on the right side of history."
