Thursday, May 14, 2015

Impact of Iron Ore Price Movements

Impact of Iron Ore Price Movements

In defence of Abbott Gov't in relation to its quest to reduce budget deficit.

It's been bandied around that for each $1.00 drop in the value of the price of iron ore per tonne, Australia loses $800 million in export revenue? The price per tonne when Abbott won Gov't was $1.39 this morning iron ore was $US62.58 a tonne. 

During the Rudd-Gillard years it got as high as $1.86 and averaged around $1.60 between 2010 and 2012. 

If the drop in price isn't bad enough for the budget, the problem is further exacerbated because the Chinese economy, although still strong, is not in double digit territory as it was during the previous Government's reign......

Is it fair to suggest that the previous Government was fortunate as not only did they inherit a strong budgetary position (think debt and deficit) from the Howard Government but also, in terms of iron ore, enjoyed terms of trade that the Abbott Gov't can only dream of?

Discuss

Update: 15/05/2015 - Some good news this past month ... 

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