October 18th, 2013
According to a report titled "The mining boom: impacts and prospects" released by the Grattan Institute earlier this year, manufacturing is likely to bounce back in the post-boom period. ; While the high Australian dollar is currently a major impediment for export-based manufacturing industries, the growing construction sector and emergence of a middle class Asian market are promising. ;
According to former treasurer Wayne Swan at the Economist Magazine - Bellwether Australia conference, Australia is well placed for a new role in the Asian century. "Now there are some who argue the transition under way in our economy to non-mining sources of growth could lead to serious economic instability, even dangling the 'R-word' to get a newspaper headline and their name underneath it," said Swan, and indeed, the possibility of a recession is being raised much more frequently.
While a recession may be unlikely at this stage, the economy grew by just 2.6 percent in the last financial year. ; This is well below the long term average of 3 percent and a definite indicator that a transition is taking place. ; The national unemployment rate also rose steadily from 5 percent to almost 6 percent over the last year, with recent September results dropping back down from 5.8 percent to 5.6 percent. ; Retail spending was also down over the same period, with the Reserve Bank keeping interest rates low in an attempt to stimulate the wider economy.
In order for Australia to emerge unscathed from the mining boom, national infrastructure initiatives need to be developed to assist the broader economy. ; While it is important to take advantage of periodic booms, long term growth is just as dependent on integrated and sustainable solutions that increase productivity across the board. ; Even though the transition from mining investment to broader based growth is occurring quite gradually, it is time for the government to put more energy and resources into other areas of the national economy.