New Zealand economy may suffer from OZ mining slowdown
Fears over the effect on the NZ economy of the slowdown in the Australian mining industry are causing concern.
New Zealand has benefited considerably from the great Australian mining investment boom, but a recent report suggests the good times may be over as the OZ mining industry retreats into survival mode. The report notes that only 25 per cent of Australian mining firms are planning major capital expenditure projects this year.
However, leading economist at the NZ Institute of Economic Research ,Shamubeel Eaqub, considers undue pessimism may not be necessary. Eaqub agreed the slowdown in OZ mining will have some effect on NZ’s immigration and trading prospects, and that fewer Kiwis will take up positions in Australia.
He added that the boom has had a positive effect on job opportunities in NZ, but believes that, as NZ’s export trade is not linked to mining, a crash in trade figures with Australia in unlikely. He pointed out that most of NZ’s exports are to Victoria and New South Wales, both non-mining states.
In the Mining Business Outlook Report, its author David Hand believes that there is now a significant shift towards the negative as regards the fall in commodity prices against the viability of new capital investment. The report states that, four years ago, confidence in the stability of high commodity prices saw capital investment grow at a fast rate, but notes the trend is now going into reverse.
Labour shortages, increased costs, shrinking returns and tough conditions have affected the sector, and a recent Deloitte Access Economics report stating the mining boom would fall after 2014 has fuelled negativity amongst mining companies. However, according to the NZ Herald, it is unlikely that projects in the planning stages will be cancelled.
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