SYDNEY: The outlook for Australian commodity export earnings for the current fiscal year has improved slightly, the government said on Monday, although the value will still decline from record highs hit last year amid the fallout from Russia’s invasion of Ukraine.
Commodity export earnings are forecast to hit A$408 billion ($273.48 billion) for the 12 months ending June 30, revised upwards from the A$400 billion estimate in September due to stronger-than-expected global growth and buoyant commodity demand from the country’s largest trading partner, China.
Despite the revision, slowing growth and rising supply means earnings are set to decline from the record A$466 billion reached last year after Russia’s invasion of Ukraine boosted energy prices.
The report said concerns about a so-called “hard landing” in the U.S. economy had eased considerably and the outlook for China had improved given stronger-than-expected economic results and government measures to stabilise the country’s residential property sector.
Iron ore, Australia’s largest commodity earner, currently trades at just over $130 a metric ton, up from about $100 a ton in early August. As a result, iron ore exports are now forecast to exceed last year’s total at A$131 billion.
The unexpected boom means Australia is almost on track to eliminate the budget deficit originally forecast for this financial year, potentially handing the centre-left Labor government a surplus for the second year in a row.
However, declining commodity prices and a stronger Australian dollar are expected to drive a further decline in commodity export earnings to A$348 billion in the 2024-25 financial year.
The outlook for future production remained healthy thanks to investment in traditional commodities and new areas like lithium and hydrogen, according to the country’s Resources and Energy Major Project report, also released on Monday.
Committed investments for critical minerals, which include lithium, rare earths and nickel-cobalt among others, hit A$11.8 billion, a 75% increase from last year, the report said.
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