Australia’s Mines Farms to drive economic growth in 2011

Australia’s Mines Farms to drive economic growth in 2011 ; AUSTRALIA'S economy is expected to remain one of the fastest growing among developed nations in 2010-11, driven by farm and mine production. The government’s chief commodities forecaster has forecast that the nation’s economy is to expand at an average rate of 3.25 per cent.

The strong growth, which compares with a 2.2 per cent expansion in 2009-10, will be supported by a surge in private sector demand, while farm production is likely to rise 8.9 per cent, the Australian Bureau of Agricultural and Resource Economics and Sciences said in its outlook report today.

Mine production is forecast to rise by 10.2 per cent in 2010-11, following an increase of 2.7 per cent in 2009-10, it added. Australia’s economy has been among the best performers following the global financial crisis in 2008. Interest rates have risen sharply in the last year as the central bank has moved to curb inflation as the biggest resources boom in more than 100 years washes into the $1.3 trillion economy.

As the labour market heads towards full employment, wages growth and inflation are chief concerns of policy makers, but Abares expects relatively subdued price pressures in the next years. For 2010-11, Australia’s inflation rate is expected to average around 2.9 per cent, it said.

The Australian dollar is expected to average around US95c with the Trade Weighted Index of 72 likely in 2010-11.

“While the Australian dollar is assumed to remain relatively strong over the next six months, significant volatility is likely to continue. This is because changes in financial market sentiment can significantly influence movements in the Australian dollar,” it said.

The Australian dollar is again nearing parity with the US dollar after a stellar rally since midyear advanced it to its strongest levels in 28 years.

In the short term, the value of the Australian dollar is likely to remain strong, especially against the US dollar, it said.

“Given the weakening US economic outlook and a higher Australian interest rate structure, it is unlikely that the value of the Australian dollar will decline significantly against the US dollar in the short term,” it added.

The value of Australia’s commodity exports is forecast to be around $211.1 billion in 2010-11, an increase of 23.4 per cent from $171.1bn in 2009-10.

Export earnings from minerals and energy commodities are forecast to be around $177.4bn in 2010-11, compared with $139.1bn in 2009-10, Abares said.

The commodities forecaster also said today Australia’s gold output is expected to rise by 15 per cent to 276 tonnes this fiscal year ending June 30, 2011, largely thanks to Newmont Mining’s Boddington mine producing at full capacity.

The full year forecast is higher than Abares’ previous quarterly forecast in September, when it expected gold output to rise by 11 per cent this fiscal year, building on a 10 per cent expansion in 2009-10 to 240 tonnes, the government’s chief commodities forecaster said in its quarterly commodities outlook publication.

Gold exports this fiscal year, which include metal imported for refining from the Pacific, Papua New Guinea and elsewhere, are forecast to rise 4.2 per cent on year to 349 tonnes, down 14 per cent from Abares’ September forecast. The value of gold exports this fiscal year is forecast to surge 20 per cent on year to $15.65bn, although down 13 per cent from a September projection, Abares said. For the latest updates PRESS CTR + D or visit Stock Market news Today

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