World trade slow in 2011
Global economic growth and trade slowed in 2011, according to the Export Finance and Insurance Corporation (EFIC)’s latest report.
2011 events including the Japanese tsunami, eurozone crisis, sovereign debt default by Greece, the debt ceiling drama in the US and the Arab Uprisings meant that the global slow down was unsurprising.
Emerging markets and commodities which are increasingly important to Australian exporters, were also softening towards the end of the year. EFIC Senior Economist Dougal Crawford said that, “despite their relative out-performance, emerging markets have slowed noticeably, as a result of tighter monetary policy to rein in inflation and slowing export demand.”
Looking ahead to 2012, the EFIC report said that the biggest economic risk will continue to be the eurozone. Senior Economist Ben Ford said that the outlook is that Europe may do enough to avoid a chain of sovereign debt defaults, “But it seems unlikely that this would be enough to promote growth-oriented adjustment.” He believes, “the outlook for the eurozone is one of prolonged stagnation-cum-recession. Under these circumstances, the risk of future sovereign debt restructurings or moves by some member countries to exit the currency union won’t disappear.”
Australian exporters will be looking to their major trading partners in Asia to see whether they manage to grow regardless of international concerns. According to Crawford, “the region’s growth is becoming more self-sustaining. But it is still reliant on the eurozone as a market for exports. And it has its own home-grown vulnerabilities.”