Finance

Note of warning as WA’s ‘economy-driving’ $2.2billion surplus buoyed by China

Western Australia’s powerhouse economy is the envy of the nation, and it’s not just iron ore driving the remarkable performance.

Treasurer Ben Wyatt on Monday handed down WA’s mid-year economic review, headlined by a previously-announced $2.2 billion surplus this financial year.

It is an increase of $1 billion from what was projected in October’s state budget and a stark contrast to the deficits forecast in every other state.

But it comes with a note of warning about the waxing and waning diplomatic and trade relationship Australia has with China, and how it could affect the state economy.

Iron ore economy

WA’s economic fortunes are closely linked to the strength of the iron ore price, which has surged to a seven-year high of $US150 a tonne.

Treasury has revised its forecast royalty revenue income over the next four years up by $265 million.

But that figure has been eclipsed by a projected $1.1 billion increase in tax revenue, reflecting the recovery of jobs lost during the COVID-19 pandemic, strong housing market activity and car sales.

“Hopefully I’ve explained to you this morning that it’s not just an iron ore story,” Wyatt told reporters.

“The mining sector is an enormous part of the WA economy and it will be for some time.

“But where we stand today highlights the fact that the broader economy is incredibly resilient.”

WA’s economic fortunes are closely linked to the strength of the iron ore price. File image. Credit: KIM CHRISTIAN/AAPIMAGE

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