Australia’s resource and energy exports are forecast to reach a record $425 billion this financial year, nearly 50 per cent higher than originally predicted, following surging prices driven in part by the conflict in Ukraine.and shrink deficits from $99.3 billion this financial year to $79.8 billion, according to the pre-election budget.In his budget speech last Tuesday, Treasurer Josh Frydenberg said net debt was significantly lower than last year’s forecast.
The boom in commodity prices helped improve the budget’s bottom line. Coal prices leapt at the start of the year and hit record highs while oil prices reached peaks not seen for 14 years, driven in part by the Russian invasion of Ukraine. It’s part of the reason the federal government will bring in $49.2 billion more in tax than estimated in the previous budget.Increasing electric vehicle production is also expected to affect the prices of critical minerals, including lithium.
But rising global inflation is expected to put downward pressure on commodity prices, with prices projected to ease to $370 billion in real terms in 2022-23 and then steady out between $263 billion and $293 billion over the following years to 2026-27.“Prices are likely to hold at relatively strong levels in the short term but decline from 2023, as demand falls back and supply expands,” the report said.