Export earnings from iron ore and surging gold prices will continue to support the Australian economy as it recovers from the largest global contraction since World War II, according to Federal Government forecasts.
The September 2020 Resources and Energy Quarterly report from the Office of the Chief Economist, says exports earnings from gold are on track to set a record of $31 billion in 2020/21.
Earnings from iron ore, which topped $102 billion in 2019/20, are forecast to be $97 billion in 2020/21.
The report forecast iron ore prices would remain around $US100 a tonne for some months before ending 2021 at about $US80 a tonne.
Overall, the report said that after hitting a record $290 billion last financial year, resource and energy exports will reach $256 billion in 2020/21 before falling to $252 billion in 2021/22.
The strong returns from iron ore and gold will be offset by reductions in coal and LNG export earnings.
The report said base metals had recovered and the prices of copper and nickel were back to pre-COVID-19 levels.
The most notable development since the last report had been the sharp rebound in the Chinese economy, prompted by the almost complete eradication of COVID-19 in China, easing of containment measures, and policy efforts to offset the impacts of the pandemic.
For other commodities, the report said:
Aluminium prices are forecast to average $US1,600 a tonne in 2020, before rising to $US1,760 a tonne in 2022. The report said global aluminium industry was facing challenging conditions caused by COVID-19, with slowing demand and rising inventory levels.