The Australian economy is "sliding down the precipice" due to "glacial" reform efforts, with a weakness in domestic demand that was "recession-like", according to a bearish research note from JP Morgan.

JP Morgan analyst Stephen Walters argued in the note that Australia was failing to make up the lag created by the plunge in mining investment.

JP Morgan says Australia has failed to make up the lag created by the plunge in mining investment. Credit:Ryan Stuart

Furthermore, the Reserve Bank was trying to mask the economy's structural weakness with monetary stimulus, he said.

"We knew for some time a plunge of mining investment in Australia was fast approaching," said Mr Walters. "The economy now is sliding down the precipice pretty much at the pace expected, as the sector moves from expansion to production."