Australia’s resource and energy commodity exports in 2019–20 are forecast to set a record of $281 billion, driven by higher export volumes and a lower-than-expected Australian dollar.
The headline figures mask divergent outlooks for different commodity markets, and the diversity of Australia’s commodity outputs provides us with some important benefits. It hedges our economy against swings in global conditions: for example, changes in energy markets that reduce coal demand may well have upsides for our huge exports of LNG. Global uncertainties that negatively affect steel and copper will likely improve the prospects for gold.
Price falls and a stronger Australian dollar are forecast to drive earnings down to $256 billion in 2020–21. The global industrial production slowdown and rising supply has seen the prices of Australia’s major resource commodity exports fall steadily over the last quarter, and prices are likely to drift down further over the outlook period, due to rising supply.
This edition of the REQ includes the Office of the Chief Economist’s annual survey of major resource and energy projects proposed, planned or underway. The survey finds that mining investment in Australia has stabilised after years of decline, with prospects of recovery from the emerging pipeline of projects.