christopher kent : non - mining business investment – where to from here? address by mr christopher kent, assistant governor ( economic ) of the reserve bank of australia, to the bloomberg economic summit, sydney, 16 september 2014. * * * i thank lara bui, natasha cassidy, bernadette donovan, stephen elias, craig evans, gianni la cava, kevin lane and tom rosewall for help in preparing these remarks. accompanying graphs can be found at the end of the speech. introduction i ’ d like to thank bloomberg for the opportunity to talk to you today. i discussed this topic at this same venue 18 months ago. the outlook for non - mining business investment is an important element of our forecasts. it depends on a range of forces acting on the economy, including the stimulus currently being provided by the very low level of interest rates. but, forecasting economic activity is hard. understanding and forecasting business investment is arguably harder still. when i was here in april of last year, i ’ d suggested that : • mining investment would be likely to peak in 2013 ; • non - mining investment would be likely to pick up, but only gradually ; and • growth for the economy as a whole would be a little below trend in 2013 and then pick up gradually through 2014. it now looks like mining investment peaked in late 2012 ( graph 1 ). despite a substantial decline in mining investment since then, growth of the economy overall picked up to a pace that was around trend over the course of the past year. much of that improvement has owed to a sharp rise in resource exports. at the same time, there has also been an improvement in the growth rate of economic activity in the non - mining sectors, even though non - mining business investment has remained subdued. this better growth of non - mining activity often gets missed given all the focus on the resources boom. while this improvement is welcome, a key question is how durable the improvement will be? it might even gather a bit more steam, thereby helping to drive overall growth to an above - trend pace at some point. such developments are possible but by no means certain. they depend in part on non - mining business investment, which is the motivation for my talk today. recent past over recent years, non - mining business investment has been subdued. after recovering from the decline that followed the global financial crisis, non - mining business investment in real terms has been little changed over the past three years or so ( graph 2 ). in

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