Each passing week I’m becoming more concerned about the global economic outlook and what it means for us here in Queensland, given that the strength of our resources sector is closely related to the strength of the global economy. My Research Assistant at Adept Economics Ben Scott and I have started thinking about the robustness of recent resources sector forecasts by the Office of the Chief Economist (in the federal Industry department) and Queensland Treasury. You can read our initial thoughts, on which we’d welcome your comments and suggestions here:
The Office of the Chief Economist and Queensland Treasury had forecast the coking coal price to decline over the next few years from around US$200/tonne to a still healthy US$150-160/tonne. Given the intensification of the US-China trade war and its likely adverse impact on the Chinese and global economies, and on the demand for steel and hence coking coal, I’m starting to think the Office of the Chief Economist’s and Queensland Treasury’s forecasts for coking coal prices might be too optimistic.
A deteriorating global economy is of great concern for Queensland’s resource-dependent regions, some of which, particularly Mackay, had bounced back nicely from slumps after the end of the mining investment boom in 2013-14. Depending on global economic conditions, those good times may prove relatively short-lived.