Beset by sliding commodities demand, a falling currency, mediocre economic data and fears of Federal Reserve tapering, the iShares MSCI Australia ETF (NYSEArca: EWA) has been a disappointment this year with a loss of nearly 8%.

In fairness to EWA, the fund has perked up in the past month, gaining 4.7% as the weak Aussie has started to show some signs of benefiting Australian stocks. Previously identified beneficiaries of a weak Aussie include Westfield, News Corp, QBE Insurance and Brambles. Of that group, only News Corp. is not a member of EWA’s 70-stock lineup. [Australia ETF Offers Rebound Potential]

While EWA’s performance has recently improved, the ETF and the Australian economy, the world’s 12th-largest, are far from out of the woods. In fact, an ominous forecast on iron prices courtesy of Goldman Sachs could weigh on EWA.

“Spot iron ore prices currently over around $131 a ton, but but Goldman Sachs sees that price falling to $108 per ton next year as seaborne iron ore moves to oversupply. Analysts believe spot iron ore could average USD126 per ton this year, a four-year low,” according to Investing.com.

Goldman said Australian mining giants such as BHP Billiton (NYSE: BHP) and Rio Tinto (NYSE RIO) could continue mining iron ore profitably even if prices fall, but smaller miners could be crimped by declining margins. Brazil’s Vale (NYSE: VALE) is the world’s maker of iron ore, a key ingredient in the production of steel.

Australian materials names, over 18% of EWA’s weight, benefited from China’s insatiable demand for iron ore. Iron ore prices surged to a record $200 per ton in 2011 as the Chinese economy surged, helping the Australian economy and dollar soar, too. Over the past four years, EWA is up about 23%. The CurrencyShares Australian Dollar Trust (NYSEArca: FXA) is up 10% over the same time.

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