A decline in mining investment in 2013 could cause problems for the economy, according to one of Australia’s leading banks.
At the NAB Private Wealth Management conference in Sydney, Alan Oster, NAB’s chief economist, said changing investment patterns are a real cause for concern.
“We are very close to the end of the phase of [mining] investment… So there will be a structural change,” he said.
“One of the things the Reserve Bank desperately wants to see is signs of non-mining investment filling the hole.”
Mr Oster, however, could not see who would replace it.
“We get quite nervous of the ability of the non-mining sector to pick up some of the slack,” he said.
Asked later whether he saw any replacement for this decline, he expressed a desire for the government to “build for the future”, with higher spending on infrastructure and other projects, but he thought a lack of political will and calls for a surplus would prevent that.
In terms of employment, according to NAB, there will be major sectoral changes.
Based on past years, Mr Oster argued more jobs will be created in the health and social assistance sector while there will be a decline in manufacturing jobs.
This would be a fundamental problem; however, he pointed out that for “every job that manufacturing has lost, social and healthcare assistance have gained two.”
Mr Oster added that the overall rate of unemployment is likely to rise slightly above the current rate of 5.4 per cent during 2013 – but not substantially so.
“If the economy grows at about two-ish [per cent] you would expect employment to slow…they still grow, but they will not grow fast enough,” he said.
However, Mr Oster concluded that the Australian economy is not in for a hard landing. Although “we see the problems in investment”, there are many green shoots in equity and in housing, he said.
