No. 3 - Department of Treasury - The Western Australian Government

Western Australian Economic Summary2006 No.3Figure 33WA COMMODITY PRICE INDEXActual and Forecast300300250250200200150150100100505000Jun-96 Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08WA Commodity Price Index (Actual) September 2005 forecastSeptember 2006 ForecastSource: DTF, Acess EconomicsThe extended rise in prices for most of the State’s main resourcecommodities have led to concerns about an end to the commodities boomnow being imminent. Access Economics consensus forecasts 1 show thatmany forecasters believe that the peak of the commodities price cycle hasalready been reached, with global prices expected to moderate for most ofWestern Australia’s key resource commodities over the next few years.However, this survey has been anticipating an imminent peak in prices forseveral quarters, with each successive survey pushing out the expectedarrival of the peak in prices. The chart above shows what Access’ publishedconsensus commodity price forecasts implied for the Western AustralianCommodity Price Index a year ago (September quarter 2005 publication), aswell as what the forecasts are currently suggesting (September quarter 2006publication).Furthermore, Access also notes that the extent of the price moderation formost base metals now expected is not as severe as forecasters had beenpredicting in previous quarters. The forecast price declines forWestern Australia’s main commodities by the September quarter 2008would still leave prices relatively high by historical standards (as also shownby the chart above).Current and future trends in commodity prices, and their implications forthe productive capacity of Western Australia’s economy, are discussed in thefeature article on page 54.1 Access Economics September quarter 2006 Minerals Monitor (the Monitor providesan outline of the views and consensus forecasts of 11 resource commoditiesforecasters).48 Department of Treasury and Finance