The Australian economy is in for a bumpy ride, with business investment expected to fall in the coming financial year.
Mining investment, the main driver for the economy in recent years, is falling and investment in other sectors of the economy are not picking up the slack.
Official capital expenditure figures to be released on Thursday are expected to show that total investment fell around three per cent in the first three months of the year, after a 5.3 per cent fall in the December quarter.
Spending in mining and resources on buildings, equipment, plant, machinery and the like was down 5.5 per cent in the December quarter.
ANZ chief economist Ivan Colhoun said it is becoming clearer that mining investment is slowing and is likely to decline sharply this year.
"The key uncertainty is the pace and magnitude of the pick-up in non-mining investment," he said.
"ANZ's view is that non-mining investment intentions are likely to have remained subdued."
The capital expenditure figures on Thursday will also have data on how much businesses expected to spend for the 2014/15 financial year, which widely is tipped to be over 10 per cent lower that the estimate for 2013/14 issued this time last year.
Mr Colhoun said the Australian Bureau of Statistics would have surveyed businesses on their spending intentions in the run up to the May 13 federal budget, and their gloominess may show in the figures.
"If anything, the balance of risks is slightly biased to the downside given the survey period coincides with the run of downbeat media coverage surrounding the Commonwealth budget," he said.
Commonwealth Bank economist Diana Mousina said the non-mining investment plans are likely to be unjustifiably pessimistic.
"History tells us that a low interest rate environment combined with the depreciation in the currency over the past year will stimulate activity in the non-mining sector," she said.
"Firms normally tend to wait for a sustained increase in activity and pick up in household consumption before committing to investment."
Ms Mousina said commercial lending has picked up in recent months, which is a good sign business investment will gain strength.
"Recent Reserve Bank of Australia communication has noted that a pick up in business investment normally takes a while to show up in a cyclical upswing," she said
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