Australia's performance in 2013 depends on how well it can rebalance its economy away from mining-led growth, say experts.
Often called the "lucky country" because of its rich natural resources, Australia's growth has long been funded by the commodities boom but now, economists say, there are a few other bright spots that could pick up where mining left off.
A recovery in domestic sectors like housing and consumption should be able to keep Australia on track for about 3 percent gross domestic product (GDP) growth this year, close to the forecasted 3.5 percent annual growth for calendar year 2012, Paul Bloxham, chief economist for Australia and New Zealand at HSBC said.
"Australia will pull off a great rebalancing act and shift from being very mining led to being more driven by other sectors of the economy," said Bloxham, adding that record low interest rates will provide support the housing and retail markets need to pick up the slack.
Michael Blythe, chief economist at Commonwealth Bank of Australia also expects a boost in housing construction as resources from mining construction become free, following a drop in investment.
"If we get the residential sector moving, that will be a big positive for this growth transition," Blythe said.
The Reserve Bank of Australia (RBA) expects mining investments to peak at 8 to 9 percent of GDP within the next two years, earlier than expected, and as a result has cut its growth forecast for this year to about 2.75 percent.
Concerns about how Australia would rebalance its two-speed economy - characterized by faster growth in one sector over others - were heightened in the second half of last year when third quarter gross domestic product growth of 0.5 percent was its slowest in a year-and-a-half as the mining boom began to peter out.
(Read more: Trouble Ahead for Australia's Economy)
Experts had begun sounding the alarm last year about the end of the country's seven-year boom in mining investment, after several major Australian miners started putting projects on hold amid declining profits.
Since then, however, there has been evidence that the RBA's moves to stimulate the economy with back-to-back interest rates cuts in November and December to a record low of 3 percent, set during the global financial crisis, are starting to have an impact, according to Blythe.
"There has been an increase in housing lending for example. There's been an increase in residential building approvals," Blythe said. "The retail side of things is obviously very soft still, but consumer spending overall is holding up… if you look at other areas – spending on motor vehicles is running at record highs, spending on overseas holidays is at record highs as well."
Sales of new homes in Australia rose almost 5 percent in November – a second straight month of gains - as falling mortgage rates bolstered demand for detached homes, according to a Housing Industry Association survey of large builders released last week.