WA recession claims are 'hysteria' Western Australia is nowhere near a recession the Commonwealth Treasury says, describing as "hysteria" newspaper reports that demand in the mining state has shrunk for the second consecutive quarter. "The idea that in the face of the largest export boom we have ever seen you ignore exports and focus on the price of the economy which is demand by Western Australia and claim that that's a recession, it belongs in the comic books not in serious newspapers," Treasury chief economist David Gruen told a Senate hearing. State final demand in Western Australia slid 1.5 per cent in the March quarter after sliding 0.7 per cent in the December quarter. "We are in the midst of the biggest mining boom we have ever seen, a significant share of that is in Western Australia and they are exporting volumes of particularly iron ore and increasingly liquefied natural gas at rates we have not seen before in our lifetimes," Dr Gruen told the hearing. So what do you do? Strip out the exports from Western Australia and focus on demand in Western Australia? That's not going to determine employment. It is a piece of the national accounts which is of interest if you happen to be interested in the national accounts. Recessions have never been assessed on the basis of demand, they are assessed on the basis of output. Treasury secretary Martin Parkinson said he found the commentary in the press "intriguing, to say the least." Apparently we have gone from a situation where if we are internationally competitive in a particular area and we generate massive exports but the rest of the economy is growing sluggishly then we are somehow in recession. This is a bad thing - to have a strong contribution to growth from exports. Now I am not saying it is a good thing, we would like to see a better balance of growth across the sectors, but some of the hysteria that is in the press today is really over the top. The economic challenge was to move from growth driven by mining investment to growth driven by mining production. "It was always going to be a timing challenge," Dr Parkinson said. The increase in mining output was never going to substitute for the contribution that we were getting from investment as investment plateaued out. The tricky thing for us was to see the non-mining sectors pick up and in particular the interest rate sensitive sectors. We are beginning to see signs interest rate sectors are responding.