The University of Western Australia Business School Accounting and Finance Professor Ray da Silva Rosa puts Western Australia's economic outlook into perspective:
In economics (as in most subjects) it's handy to have some benchmarks to put figures into perspective. Australia is a fairly small economy (around 2.52% of the world economy which is pretty good since we only have 0.33% of the world's population).
One consequence of having a small economy is that the news we get tends to be dominated by what's happening in the bigger economies and when that news is bad we get scared even though our own situation might be very good. In fact, that's what's happened with the GFC.
The global financial crisis is a crisis that has impacted the large first world economies but not so much China, India, Russia and Brazil (although all four are now struggling but for different reasons).
In Australia we have come through unscathed ... what many people don't seem to appreciate is that we have had 24 years of economic expansion (i.e., without a recession). That's a very remarkable achievement. In WA we have done even better because of the commodities boom.
In 2012 -2013 WA gross state product per capita (i.e. the amount of wealth produced per person) was $98,069, about 50% higher than the national average of $66,397. The difference was driven almost entirely by the commodities boom.
The increase in commodity prices had the effect that all economics textbooks say it would: it caused more supply to come into the market in the form of new mines being developed. The race to build the infrastructure caused demand for labour and wages to increase.
We are now coming to the end of the building phase and it's inevitable that there will be a downturn in mining construction and consequently demand for labour. The increase in supply has also caused prices of commodities to fall, again in line with economic models. All this was fated to happen.
The "problem" with our situation in WA is a bit like an airline passenger moving back to "economy class" after experiencing a stint in "business class" ... it's hard to adjust to reduced comfort but the passenger forgets the fact that they are lucky enough to be flying at all. That said, it is all very well for something to be predicted but the consequences for people affected (e.g, workers who are laid off and their families) is no less easy to bear.
The gains and losses from the economic adjustments are not evenly distributed or borne. There is a case for investing in more to ensure that people who are directly affected do not face crippling costs in work transitions.
I don't believe WA is in significant danger of getting caught up in a secondary global financial crisis. We are a small, stable economy with commodities and, increasingly, services that the developing world, including China and India need.
Extreme predictions always make good press; there's less of a market for predictions that we will muddle through but that's what I believe will happen. There are many other parts of the world in far, far worse condition (although the world has a whole is getting better ... but that's a story for another day)