In recent years, Australia’s resources sector has undergone a transition to a production-focused industry. As a result, commodity exports have risen. But, which overseas markets are buying Australian minerals?
Australia’s biggest customer, China, has been at the mercy of spiralling debt, fears of a housing bubble, and an economic slowdown. Because of this, its demand for Australian minerals has waned.
However, many experts believe emerging economies will offset this slump as these countries begin to consume more Australian commodities to assist in their own economic development.
One particular emerging economy to keep an eye on is India.
According to the Australian Government’s Department of Industry Innovation and Science’s Resources and Energy Quarterly (June 2016) report, India’s burgeoning economy is anticipated to mitigate much of China’s slowdown.
After recognising poor infrastructure was hindering further investment and economic growth, the Indian Government implemented the National Investment and Infrastructure Fund (NIIF) at the end of 2015.
IndianEconomy.net reports India requires about US$1000 billion in five years to finance its infrastructure programs to improve roads and communications.
Because the Indian Government can’t fund this program alone, the NIIF was established to act along the lines of a bank’s bank for infrastructure. The government is actively seeking foreign parties with Abu Dhabi Investment Authority reportedly showing a strong interest.
Additionally, India Government’s finance minister Arun Jaitley has been meeting with potential global investors and promising them an “advantageous” tax regime for investment within the country.
The Resources and Energy Quarterly (June 2016) report predicts the NIIF will trigger many new construction projects and boost a recovery in private investment in India. This growth is forecast to generate rising demand for raw materials such as copper, coal and iron ore – all, of which, Australian miners produce.
In the March 2016 quarter, alone, India’s construction sector rose 3.9 per cent, driven by the new NIIF projects.
As a whole, the Resources and Energy Quarterly (June 2016) revealed India’s economy rose 7.9 per cent in the three months ending March 2016, compared to the corresponding period in 2015.
Resources and Energy Quarterly (June Edition) predicts India’s economy to grow by 7.5 per cent in 2016 and a further 7.5 per cent in 2017.