The surge in LNG exports helping to boost Australian GDP, in one chart

  • Australia’s latest GDP report will be released today, and it’s expected to be pretty good.
  • Year-ended growth is expected to lift to the high 2% region, maybe more. Macquarie Bank estimates as much as 0.4ppts of this growth is entirely due to stronger LNG exports.
  • Australia looks set to become the largest LNG exporter globally within the next couple of years. Already Australia’s third-largest export by dollar value, it could soon displace metallurgical coal as Australia’s second-largest export behind iron ore.

Australia’s latest GDP report will be released today, and it’s expected to be pretty good.

A quarterly increase of around 0.9% is expected, leaving growth over the past year at 2.8%, maybe more.

While much of the year-on-year increase will reflect growth in household spending, the largest part of the economy at around 60%, there’s been another tailwind for the economy that has helped to boost growth.

LNG exports.

Just have a look at the excellent chart from Macquarie Bank for evidence.

Macquarie Bank

Exports of LNG jumped by 12.2% in the March quarter, something Macquarie estimates will add a whopping 0.4ppts to year-ended GDP growth.

As the chart shows, LNG exports have made a similar contribution to growth since 2016, reflecting increased production as LNG facilities move from the construction to production phase.

Already one of the largest LNG exporters globally, Australia could become the largest in the not too distant future. It’s set to surpass Qatar for that title next year, according to Australia’s Department of Industry, Innovation and Science.

Depending on price movements, it could soon displace metallurgical coal as Australia’s second-largest export by dollar value behind iron ore.

As LNG exports ramp up as facilities are completed, this looks set to add further to year-ended GDP in the period ahead, partially explaining why the Reserve Bank of Australia (RBA) is forecasting that Australian economic growth will sit above 3% per annum over the next couple of years.

Japan is the largest end destination for Australian LNG exports, followed by China.

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