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On 28 May 2020, Western Australian Treasurer Ben Wyatt presented preliminary Treasury modelling that forecast a 3.1% contraction in the state’s Gross State Product (GSP) in the 2020–21 financial year. It was a forecast, not confirmation that WA had entered a recession. By the October 2020 State Budget, the state had revised its forecast to 1.25% growth for that year.
What did Ben Wyatt forecast in May 2020?
The Government of Western Australia’s 28 May 2020 economic update reported preliminary Treasury modelling that put WA GSP growth at 0.7% for 2019–20, followed by a 3.1% contraction in 2020–21. The model also projected a sharper 5.1% contraction in the June 2020 quarter. Those figures describe different periods: the June-quarter projection was not the same as the forecast for the full financial year.
The update also estimated that general government revenue would be about $1.8 billion lower across 2019–20 and 2020–21 than projected in the 2019–20 Mid-year Review. Treasury warned that its forecasts should be treated cautiously because the depth and duration of COVID-19’s effects were uncertain. Read the 28 May 2020 economic update.
Was WA already in recession?
No. The May announcement described a projected future decline in annual GSP, not a completed recession. Its 5.1% figure was a modelled fall for one quarter; its 3.1% figure was a forecast for the 2020–21 financial year. Neither should be described as an observed result in May 2020.
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The headline’s “next financial year” referred to 2020–21, which began on 1 July 2020. The forecast was also specifically about GSP, a measure of economic output in the state, rather than a statement that every industry, household or measure of activity would contract by the same amount.
How the forecast changed
The successive figures below reflect different publication dates and evidence statuses. The 2021–22 Budget release reported later estimates; it did not identify them as final audited actuals in the cited material.
| Publication | Period and measure | Figure and status |
|---|---|---|
| May 2020 preliminary Treasury modelling | 2019–20 annual GSP | 0.7% growth forecast |
| May 2020 preliminary Treasury modelling | June 2020 quarter GSP | 5.1% contraction forecast |
| May 2020 preliminary Treasury modelling | 2020–21 annual GSP | 3.1% contraction forecast |
| October 2020 State Budget | 2020–21 annual GSP | 1.25% growth forecast |
| 2021–22 Budget release | 2020–21 annual GSP | 3.25% growth estimate |
| 2021–22 Budget release | 2020–21 domestic economy | 4.3% growth estimate |
The October 2020 State Budget revised the 2020–21 GSP outlook from the May forecast contraction to forecast growth of 1.25%. See the 2020–21 State Budget. The later budget release reported an estimated 3.25% GSP increase and 4.3% growth in the domestic economy for 2020–21. Those are separate measures: GSP includes net exports, while domestic-economy growth is reported separately. Read the 2021 budget release.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why did the outlook improve?
Exports provided a cushion
In May, Treasury said WA was expected to be cushioned relative to other states by commodity exports, particularly iron ore, which had largely held up at that point. The same update stressed that the outlook remained uncertain.
Conditions and activity had changed by October
The October budget speech described the economy rebounding after the June-quarter contraction. The government pointed to eased restrictions, consumer and business confidence returning to pre-COVID levels, jobs and hours being restored, and retail trade recovering. It also cited government spending, the WA Recovery Plan and infrastructure investment as supports for activity. These were the government’s stated explanations and contemporaneous indicators; the cited material does not isolate how much each factor contributed to the revised outlook. Read the Treasurer’s 2020–21 Budget speech.
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