PERTH (miningweekly.com) – Higher than expected iron-ore prices has assisted the Australian economy to rebound faster than initially projected.

In the mid-year economic and fiscal outlook (MYEFO), Treasurer Josh Frydenberg noted that Australia’s real gross domestic product (GDP) grew by 3.3% in the September quarter after a fall of 7% in the June quarter 2020.

The Treasurer noted that on a calendar‑year basis, real GDP is forecast to grow by 4.25% in 2021 following a fall of 2.5% in 2020. This compares with 4.25% in 2021 and a fall of 3.75% in 2020 at Budget.

“The underlying cash balance in 2020-21 is expected to be a deficit of A$197.7-billion, equivalent to 9.9% of GDP.

“This is expected to improve over the forward estimates to a deficit of A$66-billion in 2023-24 and to further improve over the medium term to a projected deficit of A$45.7-billion or 1.4% of GDP in 2030-31.

“The A$15.9-billion improvement in the underlying cash balance for 2020-21 since the Budget primarily reflects the faster-than-expected rebound in the economy,” Frydenberg said.

The Treasury notes that higher-than-expected iron ore prices have led to company tax receipts being A$3.4-billion higher in 2020-21 than forecast in October, which contributed to the anticipated improvement in the underlying cash deficit in 2020-21.

Treasury expects mining exports to grow by 5% in 2021-22.

“Today’s budget update highlights the importance of stable and mutually beneficial trade to Australian jobs, incomes and government revenue,” said the Minerals Council of Australia’s CEO Tania Constable.

“The government’s broader reform agenda, including more timely environmental approvals, more flexible workplace relations rules and a more modern, industry-led education and training system, will further strengthen economic growth and accelerate budget repair,” she said.