Saturday 15th October 2016 - 6:02 pm

Australia’s chances improve

by Alan Thornhill

The Federal government is expecting no more than moderate economic growth in the short to medium term.

But its economists, like those in the private sector, have been looking – with some interest – at the higher than expected prices Australian miners have beeen receiving for their coal, over recent times.

As well they might.

For if the higher prices last, government revenues will increase, and the job of getting the Federal budget back into order will become much easier.

However, no-one is singing in the basement of the Federal Treasury, just yet.

Economists, working for the National Australia Bank, have also been studying this situation very closely.

And, in an an assessment published last week, they concluded that Australians can still look forward to moderate economic growth – and possibly some further rate cuts.

However there are also some risks in sight.

They said their real forecasts for economic growth ( GDP) “are largely unchanged’.

They have been left at 3.0 per cent in 2016, easing to 2.8 per cent in 2017 and 2.6 per cent in 2018.

But they added: “the unexpectedly high settlement for Q4 coking coal prices however will provide a boost to Australia’s terms of trade, nominal GDP and government revenues.

They were not overwhelmed by those higher prices just yet, though.

“…this is unlikely to be sustained,” they said.

“And we retain our view that the recent surge in coal prices reflects short-term supply constraints and government initiatives offshore which will not continue,” they added.

So the real question now is just how long these higher prices will last.

How long will the surge be sustained?

Well, at least, we might say that Australia’s chances are looking better than they have for some time.


Please visit our sponsor

Comments are closed.

My book

wx 2

Weathercoast by Alan Thornhill

A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.

Available now on the iTunes store.

Profile

Alan Thornhill

Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.

Please visit our sponsor
Please visit our sponsor

Topics

News Archives