Nicholls predicts 6% growth in 2015-16 thanks to LNG

QUEENSLAND Treasurer Tim Nicholls is banking on gas royalties to the tune of $6 billion flowing into the state's coffers to help with the fight back from economic abyss.

The State Government is pinning its hopes on Gladstone's multi-billion dollar LNG investments moving from a construction phase to export phase over the next two years.

Mr Nicholls is banking on a surge in overseas LNG exports to help deliver a 6% economic growth in 2015-16 as well as return to fiscal surplus.

"We have predicted we will get back in the black by then, but not by as much as we had hoped," he said.

"I am quite confident those figures are good predictions, but there is no guarantee."

Mr Nicholls said, in his mid-year economic and fiscal report released on Wednesday, royalties continued to be a very volatile source of revenue with contract prices, the exchange rate and demand being key drivers of royalty collections.

"Coal export volumes are forecasted to be stronger than expected at the time of the 2013-14 budget," he said.

"Despite the moderation in global growth, strong demand from China saw a significant increase in Queensland coal export volumes in 2012-13.

"Lower coal prices forecast for 2013-14 are expected to sustain the demand from China."

Mr Nicholls said the state's major trading partners were looking to increase buying Queensland resources despite facing their own economic downgrades.

"The limited supply of coking coal from Mongolia and the Chinese government's decision to seek thermal coal with a higher energy content will also benefit Queensland as a preferred supplier of both these types of coal to China," he said.

"However, the stronger outlook for coal exports is offset by expectations of weaker base metal exports, reflecting lower than previously expected outputs from some major metal mines."



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