In the mining boom states of Western Australia and Queensland, the picture is looking grim.
For a start, while both states are expecting 2009 to be bad and recoveries to begin in 2010, Access believes the full impact of the fall in commodities demand won’t be felt until 2011 – later than WA treasury forecasts.
The economic consultancy also said it expected the downturn to be deeper than forecast as well.
The forecaster said it believed China and India would bounce back in 2010 and 2011, but commodity prices will not recover to anywhere near boom levels as mine capacity ramped up so much during the boom.
In Queensland, the fall in commodity prices is “likely to leave the state stuck in the slow lane for longer”, the consultancy said.
The sunshine state’s share of the overall Australian economy may even shrink in coming years as lower coal prices take their toll, meaning companies cut spending on construction and equipment as corporate profits take a hit.
In New South Wales Access said the expected fall in contract coal prices may put many of the $3.2 billion coal projects currently under consideration in doubt.
“That would be big and bad news for NSW – which can do without more of that – although the Federal Government’s nation-building package allowed $580 million to expand rail capacity between the Hunter Valley and Newcastle.”
The forecaster added most of NSW’s coal mining projects will be completed soon with the exception of Felix Resources’ Moolarben underground coal mine near Mudgee, which has seen costs blow out to $405 million.
Overall, the news for the entire country is that times will be tough, with New South Wales already in recession and other states heading down the way.
“Australia’s recent prosperity will unwind scarily fast,” the group added. “China’s slowdown is Australia’s recession.”
In its forecasts, Access said it expected iron ore and coal prices to suffer in the next few months, potentially falling back to levels unseen for several years.
The group also said it expected an 11.4% decline in the number of mining jobs around Australia.
One state that will suffer the least will be South Australia, however, with Access saying it would be a case of “no boom, no bust” for the state.
