CommSec's quarterly State of the States report ranks the Northern Territory in second place, suggesting the resource-rich regions are continuing to dominate.
The report analyses eight key economic areas comprising economic growth, retail spending, equipment investment, unemployment, completed construction work, population growth, housing finance and dwelling commencements.
An economist at CommSec, Savanth Sebastian, says WA and the Northern Territory are going from strength to strength.
"Where Western Australia was the strongest was around retail trade, equipment investment and population growth, and it really wasn't far behind in terms of even economic growth," he said.
"So it just highlights that resource states are clearly driving the momentum story across the Australian economy and really will be at the forefront of growth over the next year."
Strengths & Weaknesses
|NSW||Job market||Economic growth|
|Vic||Housing finance||Construction work|
|Qld||Equipment investment||Population growth|
|SA||Population growth||Housing finance|
|Tas||Real wage growth||Various|
Despite its size, the Northern Territory maintained the fastest annual economic growth rate in the nation.
Its economy was up by 27.5 per cent compared to a year ago.
The ACT was the third best overall performer, although weaker job and housing markets weighed on its economic performance.
That meant it was being brought closer in line with the very tight grouping of New South Wales, Victoria and Queensland in the middle group.
South Australia was again named the second-worst economy.
Savanth Sebastian says the results suggest the disparity between the states and territories was creating three different economic tiers within the broader Australian economy.
"I think the gap between the top states and the bottom states really, arguably, couldn't get any bigger in size," he said.
"We are seeing a three-speed economy and I think it makes it difficult for the Reserve Bank in terms of managing interest rates and activity.
"You look at the Australian economy as a whole and the broader recovery is patchy.
"There's areas of strength and certainly areas of weakness and interest, rates unfortunately are a blunt instrument to try and stimulate the overall economy."
New South Wales was heralded as the state with the best chance of making a strong economic come-back this year.
"They've got a strong job market and they're actually starting to see a resurgence on the housing front as well, and that's going to be really, really positive in terms of a huge multiplier for growth across the New South Wales economy," Mr Sebastian said.
However, the picture in the Apple Isle is very different, with Savanth Sebastian citing very few economic positives for Tasmania.
"I guess encouragingly for Taswegians, they are benefiting from higher wage growth and improved housing affordability, but there needs to be an X factor to drive the economy forward," he explained.
"At the moment you're not really seeing that, and there's a variety of weaknesses emanating out of Tasmania."
In fact the weak outlook for Tasmania and South Australia has prompted CommSec to suggest a joint effort by the Commonwealth and state governments may be necessary to lift economic momentum and overall performance in those states.