The decline in mining investment will be a “significant drag” on Australia’s economic growth, even as exports of coal and iron ore provide a boost, according to the central bank’s head of economic analysis.
It’s uncertain how far and fast investment will fall or how much the mines’ operations will add to growth, the Reserve Bank of Australia’s Alexandra Heath said today in the text of a speech in Sydney. While China will probably find it more difficult to maintain its current pace of economic growth, the world’s second-largest economy should remain a large market for Australian resource exports for some time, she said.
“We have now seen the peak in mining investment and over the near term we expect that the fall in mining investment will be a significant drag” on gross domestic product growth, she said. “Iron ore and, to a lesser extent, coal exports are expected to continue to make a positive contribution to GDP growth in the next couple of years as productive capacity continues to ramp up.”