The Reserve Bank of Australia (RBA) said Friday a downward revision of mining investment had prompted it to lower its forecast for gross domestic product (GDP) growth to below 2.75 percent in 2013, down from 3.5 percent it forecast in August.
In its November Statement on Monetary Policy, the RBA said that falling commodity prices and strong Australian dollar had put pressure on the Australian mining industry, reducing their appetite for investment spending.
"Sentiment has also been weighed down by the high exchange rate and rising cost pressures. As a result, a number of large uncommitted projects have been deferred, companies are slowing the pace of spending on some committed projects, and some older, higher-cost coal mines have been closed."
The central bank said Australia's mining companies were more reluctant to commit to iron ore and coal projects still under consideration.
"Notwithstanding the general conservatism in previous Bank forecasts about the likelihood of committed projects going ahead, the profile of capital spending on iron ore and coal in 2013 and 2014 has now been revised lower," it said.
However, the RBA still expects mining investment to rise in the coming year, underpinned by construction on a number of very large LNG projects.
"LNG investment continues to ramp up as these projects have not been adversely affected by the shift in sentiment elsewhere in the resources sector," the central bank said.
"Overall, after surging by around 55 percent in 2011/12, mining investment looks set to rise further (albeit at a slower rate), and the level of investment in the mining sector is expected to peak some time during 2013."