WA is expected to slump into a recession during the next financial year, with the state expected to take a $12 billion hit to its economy.
The State Government said WA’s economy was predicted to experience a 3.1 per cent contraction in 2020-21, with the $12 billion to wiped over the 15 months from April.
The hit will include a $1.8 billion drop in government revenue through to the end of the next financial year.
Treasurer Ben Wyatt said he expected to deliver a significantly reduced surplus this financial year, with the government expecting a 5.1 per cent contraction in the June quarter.
It was expected to take $4 billion out of the economy and cut forecast growth to 0.7 per cent for 2019-20.
It would be followed by a project $8 billion impact in 2020-21.
“The impact of the pandemic and social restrictions to contain its spread have been devastating for Western Australian businesses and households,” Mr Wyatt said.
“Having that contraction in one quarter is extraordinary – a five per cent contraction in one quarter is something we haven’t seen before.”
“I don’t think anyone would be enormously surprised when you look at the national data, the payroll data, the IMF forecasts.”
Mr Wyatt said that iron ore royalties had been stable but there had been a reduction in other sources of revenue.
“While royalty collections have remained resilient, this is expected to be significantly outweighed by declines in other sources of revenue including GST grants, payroll tax, transfer duty, land tax, vehicle licence duty, and agency own-source revenues,” he said.
He said the government would focus on creating jobs.
“We are seeing some of the worst figures anyone has seen in their lifetime,” Mr Wyatt said.
“But where we were two months ago compared to where we are now, I am much more optimistic.”