Investment outlook rests with govt

Written By Unknown on Senin, 28 Oktober 2013 | 21.29

HOPES are fading that non-mining sections of the economy will be taking up the slack of a waning resources investment boom any time soon.

So an independent forecaster believes government infrastructure spending must be encouraged.

In its latest Investment Monitor, Deloitte Access Economics says for the first time in a decade the total value of investment projects at all stages of construction has now declined for three consecutive quarters.

"It is clear that the investment in the resources sector which has underpinned growth for the best part of a decade is fading," Deloitte Access Economics partner Stephen Smith said releasing the report on Tuesday.

"However, the composition of growth in the medium term - and in particular what the key driver of growth will be - remains less clear."

He said despite record low interest rates, retail spending continues to be soft with few signs of a revival, while non-residential building activity "remains on shaky ground".

The value of non-residential work commenced over the past year is at the lowest since the immediate aftermath of the 2008-2009 global financial crisis, when the then Labor government rolled out the school building program in an effort to lift activity.

Mr Smith said public infrastructure spending can play an important part during an uncertain period of economic transition.

Tony Abbott has labelled himself as the 'infrastructure prime minister' and Treasurer Joe Hockey is pushing the funding of projects to the top of the government's agenda.

"In a phase in which business investment spending is looking increasingly shaky and support to economic activity is required, a more active public sector role in financing and supporting infrastructure projects should be welcomed," he said.

The forecaster's investment database showed the total value of projects decreased by $3.4 billion or 0.4 per cent in the September quarter to $873.7 billion, taking it 5.7 per cent lower than a year ago.

The value of definite projects - under construction or committed - slipped in value by 0.7 per cent to $464.7 billion, although this was a modest 0.6 per cent higher than a year earlier.

But while the value of planned projects - under consideration or possible - at $409 billion was little changed from the June quarter, this was 12 per cent down from September 2012.


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