From the AFR:
Treasury’s top economic forecaster has conceded that commodity prices have fallen by more than the government expected in the May budget, reducing the expected pace of Australia’s resources investment boom.
“There’s no question commodity prices have come down by more than we expected at budget,” executive director of Treasury’s macro-economic group (domestic), David Gruen, told a senate estimates hearing in Canberra on Thursday.
Dr Gruen said falling commodity prices had triggered “some pullback in some high profile investment projects.”
“We were at budget expecting truly extraordinary rates of growth to continue in resource investment,” he said.
“So the scaling back means there’s no question that our assessment now is that resource investment will not grow quite as strongly as we previously thought – but we are still talking about very high rates of growth.”
The miss will be big. At least double the forecast fall in the terms of trade and a black hole north of $10 billion. Given these guys have happily embraced the new commodity-dependent economy, shouldn’t we expect an improvement in commodity forecasting? And if not, heads to role?
