The mining boom has skewed international perceptions of the Australian economy for the worse, according to Tim Sims, managing director of Pacific Equity Partners.
In an interview with the ABC’s AM program today, Sims says that now the boom is over, international investors think the Australian economy has disappeared down a hole with it.
Here’s what Sims said:
“The most worrying thing is a misunderstanding among the international investment community about the experience we’ve just been through.
The story that you hear in the international markets is, “Oh, Australia: mining economy,” which forgets that mining is only 10% of our economy and 2% of our employed people.
Our largest retailer employs more people than our mining industry.
The next part of the story you hear is, “You’ve been through a boom, haven’t you, and now it’s a bust?”
He highlighted that offshore investors are also overly worried about Australia’s ties to the slowing Chinese economy. But “China is 5%t of our GDP output. In fact, fires and floods and earthquakes have had more impact on GDP than fluctuations in China demand has had,” Sims said.
Sims said that the investment that was made by the big miners was “on a modern day dollar equivalent basis, Australian mining companies have invested four times the amount of money that was invested in Europe to restart Europe after the Second World War under the Marshall Plan.”
That sets up productive capacity in iron ore, coal and LNG which will see Australia eclipse Qatar as the world’s biggest LNG exporter, while “coal is slated to continue to grow positively and iron ore, of course, will grow dramatically.”
It all ties together for a bright economic future.
“I think we’ve got a lot to look forward to as an economy,” Sims said.