@cophot Because the early Covid-19 modelling was that many countries including Australia were heading for massive recessions. If there was going to be such an large increase in labour supply as people lost their jobs, employment levels would fall heaps from their high levels. Also insufficient labour demand was going to keep the lid on prices with annual inflation at under 2%. The table below is from the Australian government budget of 2020-21 where 6%+ unemployment was forecast for the current year and the next two years (BTW the current rate in Australia is 3.5%). Given this prediction, inflation wouldn't be a worry and the reserve bank did everything it could to try and reduce the size of the predicted severe multi-year recession. Low interest rates with a commitment to keep them low for years. Inflation and unemployment haven't followed the path forecast with the modelling tuned out to be materially wrong. There is a massive back-track in progress.
Closer to the lithium space, GS forecast there was going to be such a large increase in lithium supply as new production came on that lithium prices would fall heaps from their high levels. Insufficient lithium demand [for this supply increase] was going to keep the lid on lithium prices with large annual deflation in lithium prices. Given this prediction the market did everything it could to protect their investments and crashed the prices of lithium stocks. Lithium prices haven't followed the path GS forecast (a 2022 average of $2,800/t for spod), so this GS modelling is increasingly looking to be materially wrong for lithium prices. There may be a massive back-track in progress having been particularly strong in the last few day.
Also, let me see who was the Australian Treasurer from 28 Aug 2018 to 23 May 2022? Someone in that position would sign-off Australian government budget forecasts like the one below. They could be quite useful in GS when they have "interesting" forecasts, say for lithium prices that need signing off.
(20min delay)