May 19, 2014

Coalition’s economic hopes rest on China’s steel mills

The long-term success of the budget will depend heavily on the appetite of Chinese steel mills for our iron ore, Glenn Dyer and Bernard Keane write.

As the government comes under sustained attack for a punitive budget, its strategists will be desperately hoping its economic and revenue forecasts turn out to be too pessimistic. That would allow it to point to a lower deficit and higher growth as evidence its cuts targeting low and middle-income earners, and the young and the disabled, have started producing results before the next election.

Missing in all the focus on who the government was flogging (and giving handouts to) was the fact that the budget had 2014-15 growth sliding to 2.5%, from the estimated 2.75% this financial year (higher than Treasurer Joe Hockey claimed in the Mid-year Economic and Fiscal Outlook in December), then back to 3% in 2015-16 and 3.5% after that. Unemployment is forecast to go up over 6% next year as well. How the international economy, and in particular China, fares between now and then will be a key factor determining whether that scenario plays out.

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2 thoughts on “Coalition’s economic hopes rest on China’s steel mills

  1. Glen

    It’s our biggest export guys; we really ought to know and get it right. It’s 62% iron iron ore … usually written “62% Fe” to avoid the word repeat. Pilbara ore at that grade is nearly 90% iron oxide, mostly in the hematite form (Fe2O3).

  2. DaveinPerth

    Our mining industry is over 80% foreign owned.
    Sure we export more $ worth of iron ore (which raises our currency and kills our manufacturing and services industry) (who happen to employ all the people in Australia ), but without a viable MRRT, 85% of the money disappears overseas.

    Abbott is the Machurian Candidate. Sent from the UK to destroy the Australian Commonwealth from the inside.

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