Paper is in for a horror year thanks to the rise of the internet and strong environmental lobbying, according to a new report.

IBIS World named pulp, paper and paperboard manufacturing as one of Australia's worst-performing sectors on its list of five "industries to fall" in 2012-13.

The research body said revenue would decline by 5.2% to $3.2 billion – six months after predicting a 3.7% fall.

IBIS World said the increasing digitisation of media was hurting downstream industries like paper.

"Confounding this is the continuing high price of woodchips, which further encourages the trend away from paper products.

"Delays in the development of several key production sites – due to uncertain economic times and strong lobbying efforts by protest groups – has further affected industry productivity and profitability."

Gunns reported a 40% slump in revenue in its half-yearly figures, partly because a concerted lobbying campaign had prevented construction of its lucrative Bell Bay pulp mill.

However, the industry may receive a boost in September if Australian Paper's $90 million recycling plant gets the go-ahead.

The other four industries expected to fall in 2012-13 are iron and steel manufacturing (-15.6%), cotton growing (-8.3%), recorded media (-6.1%) and gaming and vending machine manufacturing (-5%).

The best-performing sectors are expected to be diamond and gemstone mining (35.6%), electricity generation (28.7%), preschool education (26%), superannuation funds (21.2%) and organic farming (14.9%).