Mining investment slowdown stunts economic growth: RBA

As mining investment eases the Reserve Bank of Australia expects Australia's rate of economic growth to slow this year.

On Friday the RBA revised its gross domestic product [GDP] forecasts down to between two to three per cent in 2013, from its previous forecast of 2.25 to 3.25 per cent.

The central bank’s quarterly Statement on Monetary Policy attributed the forecasted downturn to the mining investment boom peaking by the end of the year, SMH reported.

"Over the past six months, the largest downward revisions to the mining investment profile have been in the coal sector," the RBA said.

"Despite recent rises, prices for both coking and thermal coal remain more than 20 per cent lower than they were a year ago and most forecasters expect prices to remain relatively subdued over the medium term with global demand for coal dampened by the increase of natural gas production in the United States."

The RBA also said that the global economy is stabilising, commodity prices have risen from the depths of mid 2012, and there was a sharp rise in coal and iron ore outputs in the December quarter.

"There have been further signs that the Chinese economy has stabilised, underpinned by public spending and accommodative financial policies," the bank said.

"This has provided some additional support for commodity prices and activity in east Asia, outside of Japan."

The RBA also said employment growth has been slow in recent months, with the unemployment rate rising slightly.

"Employment is then expected to pick up gradually, but to remain below the pace of population growth over most of the forecast horizon," the RBA said.

According to recent figures released by the ABS the unemployment rate for January was 5.4 per cent.

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