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Australia’s unemployment rate may rise to a nine-year high in 2012, as weak consumer spending outweighs mining and energy investment, an economist in Bank of America Corp.’s Merrill Lynch division said.

Gross domestic product will probably grow 3.25 percent this year, up from an estimated 1.75 percent expansion in 2011, Saul Eslake, chief economist for Australia at Merrill in Sydney, said in a report released today. The jobless rate may reach 6 percent by year end, from 5.2 percent last month, he said. That would be the highest level since July 2003.

Reflecting Australia’s so-called two-speed economy, retail, manufacturing and tourism industries may struggle while exporters of iron ore, coal and natural gas propel GDP, he said. The Reserve Bank will cut interest rates to help parts of the economy not benefiting from the mining boom, Eslake said.

“Outside of the resources sector and those areas dependent on it, it won’t feel like the economy is growing anything like 3.25 percent,” the report showed.

RBA Governor Glenn Stevens cut rates at back-to-back meetings for the first time since 2009 as Europe’s sovereign debt crisis weakens prospects for global growth. Investors are pricing in an 80 percent chance he will lower borrowing costs by a quarter percentage point to 4 percent at the next meeting on Feb. 7, a Credit Suisse Group AG Index showed.

More Easing
“Mainly in response to the prospect of rising unemployment, we believe the RBA will cut rates by 50 basis points over the first half of this year,” Eslake said in the report. “In response, and also driven by shifting external influences, we expect the Australian dollar to fall back under parity.”

Australia’s currency has dropped 6.1 percent since reaching $1.1081 on July 27, the highest level since it was freely floated in 1983. The local dollar traded at $1.0406 at 3:40 p.m. today in Sydney.

He predicted the nation’s currency will see a “material sell-off” in the second quarter, weakening to as low as 94 U.S. cents. “We expect this sell-off to be driven by an intensification of euro-area worries and spillover risks,” the report showed.