According to today’s Courier-Mail, Deloitte’s new Business Outlook report highlights the risks to Queensland’s economic recovery from lower commodity prices and trade tensions with China affecting our commodity, tourism, and education exports. Deloitte also rightly mentions the risk to the national economic recovery from the Melbourne coronavirus outbreak.
Lower coal prices in particular are a risk to Queensland mining jobs, and also to jobs in the supply chain, as reported by the ABC last month (Hundreds of coal jobs lost as low coal prices, coronavirus impacts mining). Lower coal prices will also mean less revenue through royalties for the Queensland Government, but we need to wait until September for a budget update to learn the full extent of the impact.
The majority of Queensland’s coal exports are coking coal and here is what has been happening to the coking coal price (illustrated by the one month ahead futures price).
And here is the thermal coal price, which also shows a large fall over 2020.
Deloitte also mentions the higher than expected retail trade numbers seen in Australia recently (see my latest video). I should emphasise that the peculiarly high May retail trade numbers don’t necessarily signal a strong economic recovery as they are likely to reflect a combination of pent-up demand from April, the impact of JobSeeker and JobKeeper, and additional spending on goods complementary with leisure (e.g. bikes, audio and video gear, etc.) which would otherwise have gone into parts of the economy not covered by retail trade data (e.g. services, accommodation). Economists expect that the June quarter GDP result is going to be very bad indeed.
Finally, regarding the domestic economic impact of China’s beef and barley retaliatory measures, check out this article prepared by Ben Scott, Research Officer at my business Adept Economics: