Iron ore and coking coal export prices are expected to halve by April, a key economic forecast has found.
The latest business outlook from Access Economics warns Australia will go into a recession this year as the economic boom unwinds.
A blowout in the account deficit and a loss of 300,000 jobs is likely to be a result of the downturn, the report said.
Treasurer Wayne Swan refused to be drawn on the subject on whether or not the country will go into a recession.
The Treasurer agreed the report demonstrated the difficult global conditions facing Australia but, when asked on ABC radio whether Australia would go into a deficit he said: “I certainly don’t speculate about that.”
The crisis and the effects on the domestic economy are expected to deepen as commodity prices fall because of reduced demand.
The Canberra based economic consulting agency said the drop in commodity prices will slash tax revenue and force businesses to shelve investment in infrastructure.
“We’re amid the largest market meltdown in modern history,” the company said.
“Commodity markets came to this late but they saw the same shocking rout in pricing recently seen in many markets.
Access Economics has forecast that contract prices for coking coal and iron ore will be halved come April.
“Given what has happened to global steel prices, we expect coking coal and iron ore contract prices to be slaughtered come April, with steaming coal prices to also be hit hard,” Access Economics said.
“It took four of five years for the good news to build on industrial commodity prices. It will take less than two years for the bad news to carve a very large and painful chunk from Australian incomes.”