In its latest quarterly economic brief, CME charted a 5% increase in iron ore production to 162.1 million tonnes over the three months to December and a 7.2% increase in gold output over the same period to 48.9t.

It represented the third consecutive quarter of growth for iron ore as expansions at major projects across the state advanced.

However, the group emphasised that while the output numbers for the state continued to paint an encouraging picture, longer-term issues relating to inadequate investment needed to be addressed.

“While the increased production of major commodities tells a positive story, exploration expenditure has continued its downward spiral,” CME chief executive Reg Howard-Smith said.

The report indicated that over the December quarter, total resources exploration spending fell 14.5% (18.1% in seasonally adjusted terms), representing a 30% decline on the previous year.

“With exploration expenditure falling in Western Australia, CME is hopeful that recently announced government programs and funding will help to halt this downward trend,” Howard-Smith said.

“Over the past fortnight, CME has welcomed both the WA and federal government efforts to boost exploration in their respective budgets.”

The state’s 2014-15 budget includes a continuation of funding for the exploration incentive scheme, which is expected to be supported by $A100 million in federal monies pledged earlier this week for the exploration development incentive.

“Industry hopes these initiatives, along with positive price signals and a continued focus on reducing costs, will assist WA to attract a new wave of investment in the resources sector,” Howard-Smith said.

As construction spending weakens in the state, WA’s economic growth over the short to medium term is expected to soften and briefly drop below the national average growth to 1.6% over 2014-15.

However, higher exports are expected to have the state back on a stronger growth path by 2016-17 and again above the national average rate of growth.

Export figures continued to hold up, with the total value of exports from the state increasing almost 6% over the March quarter to some $35 billion.

China continued to cement its place as the most important export partner for the state, accounting for more than half of the value of export earnings.

However, policy changes in Indonesia were tipped as likely to improve earnings growth in coming periods.

Iron ore export earnings for the March quarter were $19.5 billion, 36% higher than a year ago, while gold exports (excluding ores and concentrates) were worth 1.2% less than the year-ago period at $3.6 billion.

Despite this momentum, exploration expenditures tumbled over the December quarter, with spending down 22.8% for copper, down 51.2% for nickel-cobalt, down 20.9% for gold and down 22.9% for iron ore.

“Export growth is set to take the baton from investment spending as the key long-term growth driver in WA,” the report said.

“But this will not be an entirely smooth transition.”