Western Australia—post-mining boom, export diversification is key
Mining is the mainstay of Western Australian exports (Chart 4)—the state accounted for 44% of Australia’s minerals and fuels exports last year. While export volumes continue to grow—as new capacity added during the mining investment boom comes online—the commodity price plunge has seen Western Australia’s minerals and fuels export values fall over 30% since the peak in 2013.
The subdued commodity price outlook suggests export activity must diversify into other sectors. This transition will be aided by the increased availability of labour and a more competitive AUD. Indeed, non-resource exports have grown 11% p.a. since 2013.
Agricultural exports have posted solid growth—up 8% p.a. over the five years to 2016. While wheat is Western Australia’s largest agricultural export, ABARES expects the value of Australia’s wheat exports to decline 30% over the five years to FY22—due to competition from abundant world supply. Smaller agricultural export sectors show greater promise. For instance, Western Australia’s exports of fruit, vegetables and nuts have gained almost 10% p.a. over the past five years. Asia’s rapidly expanding middle-class will continue to support rising demand for these high-value products, while preferential trade agreements and a reputation for ‘clean and green’ products are likely to boost Australia’s competitiveness.