NAB chief economist Alan Oster predicts the start of production at the swag of new LNG facilities under construction, and good performance in the services sector, will help Australia avoid a recession next year.
National Australia Bank chief economist Alan Oster predicts the start of production at the swag of new LNG facilities under construction, and good performance in the services sector, will help Australia avoid a recession next year.
But an agricultural “dining boom” won’t replace the mining boom, and the property market is set for a slowdown, he said at an RSM breakfast in Perth this morning.
Pertinently for Western Australia, Chinese industrial output and steelmaking were well down, with services becoming a larger part of the oriental nation’s economy.
Iron ore prices would fall to $33 a tonne, Mr Oster said, less than a fifth of their peak level.
At that level, there would be great pressure on some of the state’s smaller iron ore miners, many of whom have breakevens above $40.
LNG production will provide a boost however, adding around 2 per cent to growth when assets come online.
Nonetheless, there was a move away from mining services companies as mining investment fell, with other services absorbing some of the increases to unemployment.
Services was in fact performing better than many anticipated, he said, and represented a larger share of the economy than mining.
Other news in Asia was mixed, with world growth of around 3 per cent, below long term trend of 4 per cent, yet substantially better than the levels for most of the past decade.
India was the stand out, with growth of around 7 per cent.