Economic growth might soften: report

AUSTRALIA may be heading towards softer economic growth with interest rates falling to record lows and resources construction activity expected to peak soon.

Deloitte Access Economics says the value of the 947 Australian investment projects in its Investment Monitor database, that are valued at $20 million or more, fell 5.6 per cent in the June quarter from the March quarter.

The economic forecaster believes that with interest rates at record lows, the Australian dollar falling to around 90 US cents and the value of the resources projects in its database falling, Australia's economy may have reached "somewhat of a turning point".

"All these pieces of data coming together are pointing towards a bit of a softer outlook," Deloitte Access Economics partner Stephen Smith told AAP.

The profile of work in the database suggests a peak in activity through 2013/14.

Beyond that, the sheer volume of work in the pipeline indicates a plateau rather than a free fall may be in store for the economy.

Even so, it might hamper growth prospects, considering engineering investment spending has contributed 40 per cent to gross domestic product (GDP) over recent years.

"We've got mining investment coming away and no other area of investment that's really looking like filling the gap," Mr Smith said.

That could also drag federal government revenue down in the coming years.

"If you're expecting softer growth, then you'd be expecting slower tax return growth as well," he said.

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