Fears the banking royal commission could filter through to the WA economy appear to be justified, with consumer confidence falling amid a crackdown by banks on lending standards.
In its latest consumer survey, to be released today, the Chamber of Commerce and Industry WA said tighter lending conditions and rising mortgage costs were putting a dampener on the State’s economic recovery in the lead-up to Christmas.
The December quarter figures show short-term consumer confidence falling for the first time in more than a year as soaring petrol prices and other cost-of-living pressures weighed on sentiment.
Despite the reversal, the CCI noted that confidence among WA consumers was still firmly in positive territory, while the outlook for the medium to long term was largely optimistic.
More than double the number of West Australians believe the economy will be stronger rather than weaker in 12 months time — at 42 per cent of those surveyed compared with 19 per cent.
Similarly, 82 per cent of respondents said they expected the economy to improve or remain unchanged over the coming quarter.
CCI chief economist Rick Newnham noted three out of five consumers said cost of living pressures were the biggest risk to confidence, highlighting the fragility of WA’s economic predicament.
Mr Newnham said it was lower income earners who were most feeling the pressure, with 44 per cent saying their finances had worsened this quarter compared with a rate barely half this for wealthier consumers.
With Treasurer Ben Wyatt due to provide a mid-year update of the State’s finances tomorrow, Mr Newnham said it was imperative the State Government maintained fiscal restraint.
“CCI urges the Government to keep a strong focus on reducing government expenditure and paying down debt,” he said.
“Holding State debt over the long-term exacerbates the financial difficulties of West Australians and passes the interest bill onto future generations.
“Paying down debt will reduce cost of living pressures in the long term.”