According to the Department of Industry, Science and Resources, income from Australian resources and energy exports will continue to decline.
The Department's latest Resources and Energy Quarterly report forecasts export earnings to decline by about 8.6% over the next two years.
Australia's export earnings for FY25 are now estimated to come in at $385 billion.
That's $2 billion less than the $387 billion for FY25 that was forecast in the Department's previous report.
The latest forecast is also tipping export earnings to further decline to $369 billion in FY26 and then to $352 billion in FY27.
The report points to numerous factors weighing on Australia's exports, including ongoing trade tensions between the US and its major trading partners.
It also notes a slower-than-expected global disinflation path and that the extended contraction in China's property sector will continue to impact exports.
Declining earnings from iron ore exports will have the biggest impact on Australia's overall drop in export value.
Iron ore remains Australia's biggest export earner, accounting for over 25% of Australia's resource and energy exports.
Weighed down
As such, falling iron ore prices are having an outsized impact on Australia's total export earnings.
The price of iron ore, currently at about US$94.50 per tonne, is hovering around a nine-month low.
Iron ore has lost about 40% of its value since early 2022, when it was trading for around US$160 per tonne.
Supply increases will further impact ore prices with new mines in Africa and South America set to come online.
Guinea's Simandou iron ore project, operated by Rio Tinto Ltd (ASX: RIO), is expected to begin shipments this year.
Iron ore exports would fall from $116 billion in FY25 to $105 billion in FY26, amid lower prices.
The declines are expected to continue, with iron ore export earnings tipped to drop to $97 billion for FY27.
LNG to tank
LNG export earnings are also forecast to decline on the back of weaker prices.
LNG exports are expected to fall by over $6 billion to $60 billion in FY26 and sink further to $53 billion in FY27.
Minister for Resources Madeleine King noted that export volumes are forecast to increase marginally over the next two years.
"While global commodity prices are easing, the report suggests Australian resources companies will continue to remain competitive on the global stage."
