The department said overall resource and energy exports had been resilient in the face of the pandemic recession, noting earnings from the sector were 50 per cent higher than during the global financial crisis.
“These forecasts come with significant risks: a second outbreak of COVID-19, another surge in trade tensions, or an unexpectedly slow global recovery,” it said.
“But on balance it remains likely that Australia’s resources and energy sector will once again buffer the Australian economy against external headwinds.”
Holding up resource exports is iron ore with $102.7 billion worth expected to be shipped this financial year. This was an upgrade on the March forecasts. Gold, which is touching all-time highs as investors seek to protect themselves, is also remaining strong with exports tipped to hit $27.4 billion this year. The department had expected gold exports to fall to $21 billion next year but now thinks they will rise to $32 billion.
But energy exports, on the back of falling demand and prices, are tipped to fall away.
Thermal coal exports are forecast to edge down to $16 billion next financial year from a downwardly revised $20 billion in 2019-20.
LNG exports, which in March were expected to reach $48.6 billion this year and $44.2 billion in 2020-21, are now forecast to make $47 billion and $35 billion respectively. LNG prices are closely tied to oil prices, which remain extremely low.
Overall energy exports have been downgraded by $58.5 billion for the next two years since the March forecast.
While the mining sector contributed growth through the first three months of the year, the department noted that none of this came from the coal sector.
“In the coming year, it is likely that this sector will make a much smaller contribution to GDP growth, as low prices and mine closures and cutbacks impact on the sector’s output,” it said.
The department said that while resource export volumes had climbed by 4.6 per cent over the past year, energy volumes were down by 2.5 per cent, with warnings they were likely to stagnate over the coming two years.
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Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.