The Australian Dollar: that little overachiever

The Australian Dollar: that little overachiever article image

The strength of the AUD is a source of joy for our importers, and for those planning the next big overseas trip. However for many of our export and import competing industries, it is having a very different effect. The appeal of Australia as a location for tertiary study remains, but many overseas families are voting with their wallets when it comes to evaluating the costs of both the course, and the local living costs in Australia these days. Education Institutions in the US are now openly canvassing students from our source markets, and the financial benefit is falling firmly towards the USA. Likewise Australia has gone from being a relatively cost-effective travel destination to one of the most expensive. This is having an impact on incoming tourist numbers, and that flows through to the local businesses that service this segment; hotels, restaurants, local air, rail and bus companies, tourist sights and tourist towns. These service businesses are also large employers. Manufacturers have also been impacted as they see their products priced way above the competition, or through trying to keep prices competitive seen their profit margin completely eliminated. The mining industry is the big winner with both high demand and increasing prices working in their favour. Some agribusiness sectors have also benefited from higher commodity prices as the global demand for food, and food security issues, tip in Australia’s favour. The strength of the mining industry is also sucking in people resources, leading to artificially high wages in that sector, and a hollowing out of labour availability in non-mining sectors. At some point the pendulum will swing back, but when that occurs, and how big the swing may be is anyone’s guess.  Has your business been impacted by the rising dollar? 


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