The Reserve Bank of Australia has cut its growth forecast for the country and says mining investment may slow faster than previously thought.
In its latest quarterly statement, the RBA predicts the the economy will grow by 2.25% this year, down from 2.5% forecast in its previous statement.
The Reserve Bank said its forecast was based on the expectation that non-mining sectors would fill the gap left by the decline in mining investment but there remains considerable uncertainty about how this transition will proceed.
With few new projects in the pipeline, mining investment could drop off faster than anticipated, the bank said.
However, the RBA said further depreciation of the Australian dollar could see a faster pick-up in non-mining investment.
It said further depreciation of a similar magnitude to that already experienced could deliver above-trend growth sooner than forecast, AAP reports.
JP Morgan economist Ben Jarman said the statement conveyed disappointment in the lacklustre growth of non-mining sectors and a sense that the hole left by declining mining investment was getting larger.
He said the statement hinted that another rate cut was on the cards.
