Australia’s strong currency, a deceleration in resource investment from a peak this year, and tightening of government spending are likely to hurt growth in 2013, central bank Assistant Governor Christopher Kent said.
“The peak in resources investment is now close,” Kent said in a speech to the Bloomberg Economic Summit in Sydney today. “Once it has passed, the decline in mining investment — and the effect of the still high level of the exchange rate and ongoing fiscal consolidation — will weigh on economic growth.”
The Reserve Bank of Australia lowered the benchmark interest rate by 1.75 percentage points in the 14 months through December as it seek to rebalance a two-speed economy away from mining regions in the north and west toward industries including construction in the south and east. The currency has held above parity with the U.S. dollar for more than nine months, the longest stretch since it was freely floated in 1983, and a private report today showed consumer confidence fell this month.
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