ANZ Expects Big Fall in Major Engineering Projects
The bank estimates spending on projects worth at least $100 million will fall to $32 billion in 2017, from $88 billion in 2014.
As expected, the mining sector is expected to be the main area of weakness, with lower commodity prices reducing the likelihood of new spending and projects.
But government backed infrastructure spending is also expected to remain subdued in the next two years, before an increase in 2017, mostly in NSW.
Recent changes of government in Victoria and Queensland are likely to reduce or delay infrastructure spending, ANZ chief economist Warren Hogan said.
“While it is widely known that capital expenditure in the resources industry will fall sharply in coming years … it is less well understood that the expected strengthening in public infrastructure investment will only provide a very modest offset,” he said.
This increases the urgency for a rise in business investment in other sectors of the economy, ANZ said, but that is currently subdued due to weak consumer and business confidence.