PERTH (miningweekly.com) – Western Australia’s economic growth is expected to be subdued during 2016, as the state’s export earnings remain under pressure owing to the low commodity prices.

The Western Australian Chamber of Minerals and Energy (CME), in conjunction with advisory firm Deloitte, on Friday released the latest Economic Brief for Western Australia, which predicted that the state’s economy would grow by 2.4% in the 2015/16 financial year, before growth accelerates to 3.9% in 2016/17.

In addition, the largest fall in engineering activity since resources investment peaked was expected to occur in 2015/16, while export growth would slow from its current pace, owing to weaker demand from key markets.

The report stated that this would result in the state’s unemployment rate continuing to increase, while employment and wages growth would slow.

The CME said on Friday that the persistence of weak prices meant Western Australia’s export earnings remained under pressure, with the state’s resources export returns down 23% compared with the same time a year ago.

Total Western Australian export earnings fell by A$3.9-billion, or 14.1%, to A$23.8-billion over the June quarter 2015, the CME reported. This represents a 22.9% yearly decline in total export earnings, or A$7.1-billion, since the June quarter 2014.

Significant gains in export earnings from copper ores over the year were not enough to offset falling earnings from Western Australia’s other major commodities, most notably natural gas and nickel ores. Continued weakness in commodity prices remained the dominant driver of the continued decline in Western Australia’s resources export earnings, the report said.

Energy prices remained the most under-pressure commodity grouping, with the benchmark price of oil still roughly half of what it was a year ago. This has flowed through to benchmark liquefied natural gas (LNG) prices, too, which were down 37% in the past three months alone.

The CME noted, however, that mineral prices seemed to have stabilised.

The CME reported that the output of Western Australia’s major resource commodities lifted in the June quarter following a slow start to the year, suggesting most major commodity markets had adjusted to a new, lower price market structure.

All six major mineral classes experienced growth. Manganese output increased by 8%, gold increased by 5.3%, nickel output increased by 4.3%, and bauxite was up 4%. Iron-ore and copper also recorded reasonable growth, with output increasing by 2.8% and 2.1% respectively.

Australia’s total production of crude oil and condensate for the June quarter 2015 was 4.3-billion litres, largely unchanged from the previous quarter, while gas production in the June quarter of 2015 was 16.4-billion cubic metres, marking a 3.1% increase on the March quarter, and a 4.4% increase on the same time last year.

State specific production data for the oil and gas sectors were not available.

Exploration activity has also been hit, as lower prices led to a reduced incentive for investment in searching for new resource fields.