A recent Deloitte Economics report found that business investments in Australia have increased substantially over the last two quarters. Construction spending has surged by nearly 4% over the last quarter. However, the report expects that investments are likely to hit their peak and economic growth could stagnate in the coming quarters.
The report stated that some projects were being discontinued and contractors were participating in fewer new projects. This suggests that many contractors are going to need to cut their forecasts in the coming months.
The mining industry has been one of the leading contributors to investment activity and construction. The industry has been spending considerably less on purchasing new capital and investing in new infrastructure. Prices of iron ore have plunged by nearly 40%, which is expected to have a long-term impact on all businesses attached to the mining industry.
Deloitte said that the maturation of the mining industry isn’t the only factor that could be holding back investment activity in Australia. The nation is also contending with a number of concerns over the state of the global economy. The slowdown in China is expected to slow economic growth in Australia and force companies to scale down on new investment activities.