Australia's mining and energy export earnings are expected to hit a record high this financial year then drop 10% in the year to June 2021 as commodity prices tumble due to coronavirus pandemic lockdowns, the government said on Monday.
Resources export earnings are forecast to reach a record A$293 billion ($201 billion) in the year to June 2020 thanks to a surge in iron ore prices due to supply disruptions in Brazil and solid Chinese demand despite the coronavirus pandemic.
However, the 2020 forecast was revised down by A$6 billion from the government's March outlook as prices slumped for coal and liquefied natural gas (LNG).
"After 11 years of growth, the world is facing a COVID-19-induced downturn of a breadth and scale that now seems likely to be much larger than assumed in the March 2020 Resources and Energy Quarterly," Australia's Chief Economist Russell Campbell said in the government's June quarterly outlook.
In the 2021 financial year, resources export earnings are expected to fall to A$263 billion, with iron ore, LNG and coal prices seen weakening, offsetting gains in copper and gold prices.
"This forecast comes with significant risks: a second outbreak of COVID-19, another surge in trade tensions, or an unexpectedly slow global recovery," Campbell said.
"But on balance, it remains likely that parts of the service sector will bear the brunt of the downturn, and commodities will once again buffer the Australian economy against external headwinds."
Australia, vying with Qatar as the world's top LNG exporter, faces a sharp drop in LNG prices in the 2021 financial year, set to drive down export earnings by 26% to A$35 billion.
Exports of thermal coal have shrunk for only the second time in two decades as the pandemic hit demand. Thermal coal earnings are expected to fall 19% in 2021 to A$16 billion.
(Reporting by Sonali Paul; Editing by Lincoln Feast.)
