Global demand for Australia's most lucrative export, iron ore, shows no sign of waning, with one major bank forecasting a surge in demand that will keep the price high for the next 12 months.

Demand for gold, copper, silver and iron ore is rising as supplies tighten, fuelling a potential 'super bull' phase for commodity prices, according to HSBC.

"HSBC's forecast is that iron ore prices will average $US105 ($157) a tonne in 2025," chief economist Paul Bloxham said.

"So, lots of evidence really supports the idea that commodities prices will stay elevated and that we're in a bit of an upswing at the moment."

Demand from China, the largest buyer of Australia's iron ore, is expected to take a hit as its property market falters.

But a surge in renewable energy manufacturing in China and around the world will more than make up for any shortfall.

One major source of iron ore demand will be from projects funded by the US Inflation Reduction Act.

"It's a big policy measure there that has been taken to support investing in capacity to make the energy transition," Mr Bloxham said.

"It's happening in Europe, it's happening in Japan. Australia of course has followed as well to support our energy transition.

"That's driving a lot of the demand for the increase in the products that go into electric vehicles, solar panels, batteries, and wind farm equipment."

May's federal budget papers show Treasury assumes the price of iron ore will hover around $US60 ($90) per tonne.

But it's currently close to $US120 per tonne and some economists predict prices are set to stay at about $US100 per tonne.

"The bottom line is that the extended deficits the Treasury's forecasting over the next couple of years, if commodities prices stay higher, they become smaller or potentially near a surplus," Mr Bloxham said.

"But it depends on a whole range of other things that go on in the economy as well, like how much spending gets factored in and how the economy more generally travels, because it's not just about commodities prices, it's about unemployment and inflation."

Independent economist and budget expert Chris Richardson also expects a massive improvement in next year's forecast budget deficit, currently forecast at over $20 billion.

"It's the same for the coal price.

"So it's big bucks, it's just not enough bucks."

Mr Richardson told the ABC a 2024/25 surplus was possible without the stage 3 tax cuts.

"But it's not necessarily the right thing to do," he said.

Australia's unemployment rate is also expected to rise to 4.5 per cent later this year.

But even a rising unemployment rate won't prevent the government hauling in an even bigger personal income tax take next financial year, according to Mr Bloxham.

"Well, so far the lift in the unemployment rate we've seen has mostly come about because we've boosted the population -- so we've got more people who are able to work -- and we've slowed down the job creation but we haven't actually seen widespread job losses."

"And we haven't seen even a fall in employment — it's being growing in a trend sense, it's just that we've got a lot more workers in the system."

So, if the government is expected to haul in a lot more cash next financial year, what could it do with the money?

The World Today asked the treasurer and his office said Treasury will update the budget in due course.

The other lingering question is, why would governments significantly undershoot the forecast price of Australia's biggest export?

Mr Richardson says it's because treasurers "love to have that wiggle room".

"Almost all of the time the news is going to be much better than that assumption, so they can announce extra dollars and pretend that it's their excellent management skills as opposed to something that was always going to happen," he said.

"But if the world economy runs into trouble and if key prices like iron ore fall over, then Treasury and the treasurer can say 'well, we were already being very conservative'."