The Australian economy isn’t looking quite as bright as it has in recent years, with mining investment having fallen from a years-long boom.
Still, “there are many more reasons to be happy than most Australians have realised”, Deloitte Access Economics reports today.
From the report:
China has cheered up, interest rates could move even lower (and then stay low), the dollar is off its peaks (and may ease down further over time), while business and consumer confidence is lifting.
And the better part of a trillion dollars spent on getting minerals and gas out of the ground is now paying off as increased export volumes.
Or, in short, there are many more reasons to be happy than most Australians have realised, with some ‘big guns of growth’ pointing in a positive direction.
Yet there is one big negative: the spending on mega mining construction projects which generated most of the growth in Australia’s economy in recent years has already peaked, and the fall from that peak will strip the better part of a year’s growth out of the next three years.
Even so, there are so many other positives – especially higher exports, but also lower imports and a dose of better news on retail and homebuilding – that the overall pace of economic growth won’t be much below trend.
However, ‘below trend’ is still the bottom line, and that is where we’ll stay through to late 2015.
Deloitte notes that the economy – which has relied heavily on mining investment so far – is rebalancing, driven by changes in interest rates, the AUD, commodity prices and the mining-related construction cycle.
The firm’s economists expect mining output to take off in the next five years as the industry moves into its next phase and more mines come onstream.
Education and health spending are tipped to rise, with the latter assisted by the Government’s DisabilityCare scheme, while low interest rates boost the finance, retail and homebuilding sectors and a falling AUD will help manufacturing and tourism.
There’s more on Deloitte’s news page.