CANBERRA: Australia’s second-tier export markets are booming as our top three markets in China, Japan and South Korea turn down.
Free-trade agreements with the US and New Zealand are supporting rapid growth in sales while India, which is at the top of the government’s priority list for a new trade agreement, is the fastest growing among our top 10 markets.
Australia’s trade is deeply in deficit, with imports exceeding exports by $2.8 billion in May, according to the Australian Bureau of Statistics, following a record $4.1bn gap in April.
Although volumes of iron ore and coal exports are soaring as new resource projects are completed, falling prices mean that Australia is collecting less revenue. Total export revenue in the three months to May was 4.8 per cent below its level at the same time last year.
But the fall would be far steeper were it not for the success of Australia’s exporters in winning sales outside the top three markets. Australia’s exports to China in the three months to May were a massive 22.9 per cent below their level of a year ago, while shipments to Japan and South Korea were down about 17.5 per cent in the same period.
These falls have reduced the top three markets’ combined share of Australia’s exports from 60 per cent to 52 per cent in just 12 months.
But most of Australia’s other export markets are still registering good growth, averaging 7.5 per cent over the past year and are taking a much more diverse range of goods and services.
Australia’s exports to the US, which is Australia’s fourth largest market, have been rising strongly over the past three years and are 25 per cent higher in the three months to May than they were at the same time last year.
Beef is Australia’s biggest export to the US and it has benefited from the expansion of quotas negotiated during the free-trade negotiations completed a decade ago. Australia’s next biggest export to the US is aircraft components, with defence and civilian aircraft companies outsourcing to Australian manufacturers. Australia is the second biggest exporter of wine to the US behind France.
Trade Minister Andrew Robb yesterday highlighted the benefits of the Australia-US free-trade deal, saying more than 90 per cent of the two-way trade was tariff-free, while two-way investment had doubled to $1.3 trillion.
A free-trade deal also underpins Australia’s trade with New Zealand, where motor vehicles, computer parts, pharmaceuticals and medical instruments are Australia’s biggest exports. The New Zealand market is 6.5 per cent better now than it was a year ago.
Mr Robb has made a free-trade agreement with India his top priority, and that export market has registered 31 per cent growth over the past year. Coal is the biggest export, with India relying heavily on coal-fired power stations to fuel its economic growth.
The downturn in China is spilling across the region. Important markets such as Singapore, Malaysia and Thailand are showing no growth, while exports to Malaysia are down sharply.
But Australian exporters are making gains with annual growth rates of between 8 and 11 per cent in Indonesia and Vietnam, supported by agricultural and seafood exports ranging from live cattle to wheat and crustaceans.
Services exports are also performing well, rising 11.4 per cent over the past year, helped by receipts from tourism. The number of Chinese tourists to Australia surpassed 900,000 last year. Australian professional services firms continue to be successful in winning clients in the region.
The strong performance across these markets has been helped by the fall in the value of the Australian dollar, although the Reserve Bank still believes it is too high, hindering competitiveness. It has been achieved in the face of a global slowdown in trade over the past 12 months.
