The world price of Australia’s mining exports has more than tripled over the past decade, with GDP increases from 2% to 8% in mining sector investment spending during this period, according to a Reserve Bank of Australia (RBA) report.The mining boom represented a big shock to Australia’s economy – impacting on living standards and leading to a significant appreciation of the Australian dollar.
Imbalance in economyThe appreciation of the Australian dollar has, however, weighed on other industries exposed to trade, such as manufacturing and agriculture, states the RBA report. Earlier this year, Australian officials stated that the country is now transitioning from mining and construction investment towards other drivers of growth. This comes in light of the mining boom that has seen an imbalance in the Australian economy. In Q1 2014 the mining industry contributed around 80% of the jump in growth in Australia’s economy, according to reports.
Economy without boomRBA constructed counterfactual study for how the economy would have evolved without the boom; suggesting that the indirect effects of the boom have been larger than the direct effects of demand on upstream industries. Notably, many of the effects of the mining boom are still unfolding; in particular, many mining projects are transitioning from their construction phase to production, reports RBA. The effect of the mining boom on living standards can be gauged by the change in real household disposable income per capita.
Employment growthThe stronger activity arising from the mining boom results in lower unemployment, states RBA.
The mining boom is estimated to have lowered the unemployment rate in Australia by 1¼ percentage points in 2013 – some of which represents a long-term reduction in unemployment.