From FT Alphaville today comes the above chart showing mining investment’s massive contribution to Australian GDP over the past two years, whereby mining-related capital expenditures roughly doubled as a share of GDP. The above chart is probably the best visual representation that I have seen of the impact from the mining investment boom and highlights the big challenge facing Australian policy makers in maintaining growth, employment and living standards as the boom unwinds.
The chart also illustrates why Kevin Rudd has been quick to highlight the dangers posed by slowing Chinese growth since he was returned as Australia’s prime minister:
When I look at the challenges of rest of this year, and certainly for the upcoming three-year term, the huge outstanding economic challenge for us is the end of the China resources boom. This will have a dramatic effect on our terms of trade, a dramatic effect on living standards in the country, a dramatic effect also potentially on unemployment unless we have an effective counter-strategy.
