Australia's mining investment will sharply reduce resource exports and infrastructure materials this year
2014-01-29 16: 10: 35
Editor in charge: Catherine
(Report from this newspaper) Although economists generally expect Australian mining investment to decline sharply from the middle of this year, the surge in resource exports and government infrastructure spending will stimulate economic growth in the next few years.
In a survey report, economists Dylan Eades and Justin Fabo of Australia Sheng Bank pointed out that with the completion of existing development projects and the completion of large-scale liquefied natural gas (LNG) projects, capital investment by resource companies will begin this year. During 2016, it will drop sharply from the previously expected 3120 billion yuan to 2800 billion yuan. Economists predict that capital expenditures for existing projects will rise to 1600 billion yuan from the previous 1800 billion yuan due to increased costs.
Although mining investment will decrease sharply, the production phase of the mining boom will greatly increase export volume, which will promote domestic economic growth. Economists predict that next year's iron ore production in Australia will jump from 5.5 million tons last year to 6.85 million tons, and LNG production is also expected to expand from 2015. He believes that total resource exports may contribute one percentage point to GDP every year in the next four years.
The strong iron ore export business will take the lead in driving economic growth. The LNG export business will join the ranks of iron ore from next year. The government infrastructure department will also start to contribute to economic growth from 2015.
The mining sector is showing signs of stabilization, and the problem of project delays and cancellations that were troubled two years ago has gradually diminished. Strong iron ore prices also benefit Australia's large iron ore producers.
Even so, mining giants such as BHP Billiton and Rio Tinto still intend to reduce their capital expenditures in the next two years. Economists added that mining companies' commitment to cost reduction has also led to a reduction in employment opportunities.
Since November 2011, the Reserve Bank of Australia has slashed official profits by 11 basis points, aiming to stimulate sectors that are sensitive to interest rates. Low interest rates have strongly boosted house prices, supporting a small increase in Australian household spending and a potential recovery in the retail industry.
At the same time, since mid-April last year, the Australian dollar's exchange rate has fallen sharply by 4%, partly because the central bank continues to suppress the Australian dollar, which will provide support for export-oriented industries.
However, the market generally expects the unemployment rate to rise further this year, and the slowdown in the economic growth of Australia's largest trading partner, China, will continue to put pressure on Australia's economic outlook. In addition, the Chief Executive Officer of the Reserve Bank of China (Glenn Stevens) warned that monetary policy alone cannot promote long-term economic growth. Australia also needs to rely on government policies and stimulus strategies to improve corporate investment and productivity.
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