The government forecaster said increases in volumes shipped and higher world prices for most products would more than offset the negative effect of an assumed stronger Australia dollar – hence the increase in export value.

The metals and other minerals industries are forecast to contribute $35.2 billion to export returns in 2004-05, an increase of 11 %. Except for gold, most metals and other minerals commodities are forecast to show rises in export income.

ABARE said the biggest increases would be for iron ore, nickel, copper, and iron and steel.

The value of minerals and energy exports is projected to grow in the five years to 2008-09 to more than $63 billion in 2003-04 dollar terms – an increase of 21% from 2003-04.

Overall, ABARE forecast Australia's commodity export earnings would increase by 8% to A$88 billion in 2004-05.

"The value of commodity exports is forecast to increase in 2004-05, mainly because of higher export shipments in response to global economic recovery," ABARE executive director Brian Fisher said.

ABARE expects world consumption of all the major minerals and energy commodities to increase in 2004 on the back of higher growth in global industrial activity following a turbulent 2003. World prices of most minerals and energy commodities are forecast to continue rising in 2004, with growth in consumption expected to outpace increases in production.

All else being equal, higher world prices will then encourage expansions in production capacity, which is likely to place downward pressure on commodities in 2005.

However, the agency warned that risks were considerable in the outlook for global economic performance given that a further sharp depreciation of the US dollar or an economic slowdown in China could adversely affect world economic growth.

World economic growth is assumed by ABARE to be 4% in 2004, then moderating to 3.6% in 2005 and averaging around 3.6% per year over the medium term to 2009.

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