Western Australia – not a one-trick ponyDecember 21, 2018 / By
When one thinks of Western Australia (WA), other than its pristine beaches and the world renowned Margaret River wine region, one other word usually comes to mind; “mining”. This is with enough reasoning too as the State’s mining industry accounts for approximately 30% of overall Gross State Product (GSP).
With abundant natural resources, the WA economy has a strong exports industry. This has helped boost employment and business investment growth not only in the resources sector, but in other value add industries such as construction and manufacturing.
Due to the concentrated nature of WA’s economy, the State’s GSP/capita (which accounts for population) by far exceeds all other States in Australia. To put this into perspective, WA’s GSP/capita is $98,997 versus that of New South Wales (NSW), which is in second place at $74,955.
But how does WA compare to the rest of Australia after discounting the mining effect? Since the mining industry is intrinsically linked to other industries, it is impossible to exactly ascertain its value-add benefit to the overall economy. However, based on gross value added (GVA) figures, the mining industry’s direct contribution can be deducted from overall GSP.
Interestingly enough, after removing the 30% GSP contribution from the mining industry, WA still ranks second in the country (behind NSW and just ahead of Queensland) based on GSP/capita excluding mining terms. Although the State’s reliance on the mining industry has been crucial for economic prosperity, the contribution that the rest of the other industries make on a per capita basis has also been quite strong.
Figure 1: Australian States GSP/capita
*Data based on top 5 States by GSP
And if WA was a country (too late to join the WAxit party?), on a GDP/capita measure, the State would be ranked amongst the top 5 in the world if the gross value added from the mining industry is included, and without it, amongst the top 15 on a per capita basis.
Table 1: World rankings – GDP/capita
Source: World Bank/JLL
GDP/Capita figures as at 2017 unless otherwise stated
*GDP/Capita figures as at FY 17-18
*WA and Australia figures converted from AUD to USD based on spot price as at 19/11/2018
This makes a compelling case for the other industries apart from mining, contributing towards economic growth. Healthcare, education and training, manufacturing and financial services are just some of the other bright stars when assessing the State’s economy. These industries are also increasingly gaining momentum of late.
There is no doubt the 30% of GSP that the mining industry accounts for is a huge portion of the pie and will remain the case, but it does appear that WA is more than just a one-trick pony.