The outlook for Australia’s resources to 2020 remains positive, despite tumbling commodity prices this year hitting Australia’s export earnings.
Mineral and energy commodity export earnings are forecast to decline by 8.2 per cent to $179 billion in 2014-15, says the Commonwealth Department of Industry and Science in its quarterly report.
Worse than expected falls in the iron ore price have prompted speculation that the federal budget will lose another $1.8 billion in revenue next year.
However resources earnings should rebound by 6.2 per cent to $189.95 billion in 2015-16, the report said.
That should keep on increasing at the same rate to $240 billion – based on the current value of the dollar – by 2019-20.
By then, Australia would be the world’s largest exporter of liquefied natural gas, iron ore and coal.
The department’s chief economist Mark Scully said the combination of increased volumes, projected higher prices and a fall in the Australian dollar were expected to support growth in export values.
However non-mining investment would be a key driver for Australia’s economy and jobs growth with mining providing less employment.
CommSec chief economist Craig James said the latest forecasts should clear up investor concerns, with short-term pain but longer-term gains.
The key risks would be China’s transition to lower growth and whether it is lower than expected.
This year’s fall has been driven by falling iron ore, coal and oil and gas prices more than offsetting higher volumes.
Prices of those commodities, especially iron ore and coal, should increase by the end of the decade.
The strongest growth will be a near tripling in LNG exports, which should start emerging from 2015-16 following massive investment in new projects in Queensland.