Boom has a few good years yet
A report published by BIS Shrapnel shows that the country’s mining boom still has a few years left to run, with mining investment continuing to underpin activity of coming years.
The report found that the booming mining sector will continue to see the country’s GDP hover at around 3 per cent, before it tapers off and diversification of investment picks up the slack.
“Don’t panic. Mining investment will continue to grow, albeit more slowly, for a few years yet,” says BIS Shrapnel’s Chief Economist, Dr Frank Gelber.
The report found that Western Australia still has three years of projects under way, while Queensland has five years of development to go.
BIS Shrapnel forecasts have had a mid-decade downturn in mining investment forecasts for some time.
It’s the magnitude of the eventual downturn in mining investment that will determine the severity of the impact on the rest of the economy.
As mining investment peaks in 2014, and starts to decline, non-mining investment will stabilise and start to pick up, taking over as the engine of growth, and smoothing the transition.
But despite the solid signals from the sector, business is ‘still really tough’, with non-mining companies are struggling to secure growth by reducing costs, leading to substantial falls in investment.