Sydney, Aug 24, – Australia’s central bank governor said Friday he sees no immediate sign of an end to the country’s mining boom, a day after the resources minister declared it was over.
Glenn Stevens weighed in on the debate after Resources Minister Martin Ferguson said: “You’ve got to understand, the resources boom is over. The commodity price boom is over and anyone with half a brain knows that.”
The Reserve Bank of Australia predicted in its quarterly outlook on monetary policy this month that the boom would end “somewhat earlier than previously thought”, putting it at “sometime in 2013-14”.
Stevens said there was no reason to alter his view that the pipeline of projects that helped the country avoid recession in the global downturn would slow more than previously expected.
“We haven’t seen anything that has caused us to materially revise our profile for it,” he told a parliamentary committee.
“Looking ahead, the peak of the resource investment boom as share of GDP — the highest such peak in at least a century — will occur within the next year or two.
“After that the rate of resource investment is likely to decline, while the export shipments of the resources themselves will pick up.”
Ferguson’s comments came after the world’s largest miner, BHP Billiton, delayed an expansion of its huge Olympic Dam copper and uranium mine as it reported its first profit slump in three years.
Cooling in China, whose economy grew 7.6 percent in the second quarter of this year, its slowest pace in more than three years, and ongoing turbulence in Europe saw BHP’s annual profit dive 35 percent to US$15.42 billion.
Analysts have warned of growing headwinds in Australia due to the commodity slowdown, with Deutsche Bank this week saying the mining-powered economy was at risk of slipping into recession in 2013 as the value of its exports tanks.
Stevens said the Australian economy was growing at close to trend, with relatively low unemployment and low inflation, but acknowledged there were “risks and uncertainties” in the future.
“Overall, growth is forecast still to be close to trend, albeit with a different composition from that seen in the past year or two, and inflation consistent with the target,” he said.