LAUNCESTON, (Australia): Australia expects a boost to its commodity export earnings caused by Russia’s invasion of Ukraine to last into 2024, upping its forecasts for both the current and following year.
The Australian government’s commodity forecaster said in its latest quarterly report released on Tuesday that export earnings would rise to a record A$450 billion ($293 billion) in the 2022-23 fiscal year that started on July 1.
This was up from A$419 billion in its previous report and will eclipse the prior record of A$421.6 billion in the year just ended on June 30, which was itself up 37% on the export revenue from the 2020-21 fiscal year.
For 2023-24, export earnings were pegged at A$375.5 billion, up from A$338 billion in the previous report. Australia is the world’s largest exporter of iron ore, coking coal, liquefied natural gas (LNG) and lithium, while it ranks second in thermal coal and third in gold and in copper ores and concentrates.
The forecast for fresh record export earnings in the current year was, however, tempered with an assessment that downside risks have risen since the last quarterly outlook in July.
“Downside risks are substantial,” the Office of the Chief Economist at the Department of Industry, Science and Resources said in the report. These include inflation proving harder to reduce than expected, tighter global financial conditions inducing debt distress in emerging market and developing economies, renewed Covid-19 outbreaks and lingering problems in the Chinese property sector, the report stated. Some risks could also provide upside for Australia’s exports, such as Russia cutting off gas exports to Europe.
The report noted that some of Russia’s exports of crude oil, coal and natural gas becoming stranded as European sanctions in imports start to take full effect from December this year. It’s likely that not all of Russia’s commodity exports can be re-routed to other buyers such as China and India, thereby reducing overall global supply and keeping prices elevated.