Economic growth and increasing revenue have been driving global business activity for some time. Recent events have shown that this positive trend is being realized in the banking sector as well. With an increasing number of businesses looking to raise funds, it’s essential for potential investors to understand the factors that fuel growth in an increasingly competitive environment.
Source Bloomberg: Australia’s earnings from energy and mining exports are forecast to set another record in the next 12 months, driven by an accelerating global economic recovery from the pandemic.
They are forecast to rise by nearly 8% to A$334 billion ($254 billion) in the year to June 30, 2022, “propelled by ongoing dwelling and infrastructure spending in many countries,” the Department of Industry, Science, Energy and Resources said in its latest quarterly report. Exports earnings in fiscal 2021 are seen at a record A$310 billion.
But next year could prove to be the peak of the commodities upswing, with the government expecting revenues to moderate to A$304 billion in the 2023 fiscal year as economic growth starts to cool and prices soften as a result. The report also noted downside risks to its forecasts from a potential spike in global inflation and a sharper-than-expected tightening of monetary policy by major central banks, as well as delays in the rollout of Covid-19 vaccines.
“Another downside risk is the extent of further disruption to Australian resource and energy commodity trade with China, which took 45% of such Australian exports in 2020,” the report said.
The resources sector is expected to see another strong year, with the mining of iron ore and coal set to reap huge profits from rising commodity prices. The surge in resource prices is expected to continue next year, according to the International Energy Agency.
Rare earth minerals will continue to be a major opportunity for investors and political chess moves between governments. Oil and gas will be another great commodity that will be an investor’s dream and a working man’s reduction in spending power (in effect – inflation).
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Stu Turley, President, Sandstone Group