According to the latest Deloitte Access Economics Business Outlook, the mining industry output will reduce.
“Australia’s industry growth landscape is very much a service sector story,” Deloitte Access Economics partner Chris Richardson said.
“Mining’s output surge of the moment won’t last much beyond the next two years – essentially the period in which huge gas projects ramp up to their nameplate capacity.”
He says that means the fastest growing industry will be health care with demographics and “the aches and pains of our ageing population” and the National Disability Insurance Scheme starting to “really hit its straps”.
He said the global easing in inflationary risks and the related delay in the timing of interest rate rises will see extended the growth runway for the finance sector.
It would also create “some extra wriggle room” to business services and reduce the risk for wholesalers and retailers that sagging housing prices could pose problems before improving wage growth provided a rising tide for the sector.
He said inflation will remain subdued.
“None of the three big drivers of inflation risk – a strong economy giving businesses pricing power, or wage growth outstripping productivity growth, or rising import prices from a falling $A – currently point to anything like a surge in pricing pressures,” Mr Richardson said.
“At best they spell out a very slow burn in which pressures will lift over the next couple of years. But that lift will be from “not much happening” to “little happening”. That’s why the Australian inflationary outlook is pretty boring. No, inflation won’t stay as low as it is today. Equally, however, it won’t bounce back off the canvas any time soon.
“Global growth has the best breadth of anything you’ve seen since Clive Palmer started his diet, yet world inflation remains strikingly sleepy.”