State of trade: down but not out

State of trade: down but not out article image

Confidence among Australian exporters is down as traders face an uncertain world economy, a strong Australian dollar and rising transport costs. The findings of the 2011 DHL Export Barometer revealed less than half of exporters believe orders will improve over the next 12 months. It’s the first time in the survey’s eight-year history that confidence has fallen below 50 percent for an entire year. The Australian Trade Commission’s chief economist Tim Harcourt says he was surprised the results weren’t worse. "It seems the exchange rate is worrying people. But interestingly enough, 40 percent of people also import and the exchange rate is actually helping them. There are some swings and roundabouts happening there." In recent months, the Australian dollar has peaked at its highest level since the resources boom of the late 1970’s and early 1980’s. The change hasn’t gone unnoticed, with 81 percent of exporters saying they had been impacted negatively by the high exchange rate. The recent spate of natural disasters in Australia and around the world has also caused significant economic disruption. Queensland suffered floods and a cyclone, Victoria floods, Japan a tsunami and an earthquake, and Christchurch an earthquake. The results from the Export Barometer showed 1 in 5 exporters had been affected by natural disasters both in Australia and overseas. "That’s 20 percent, so it’s pretty major," Harcourt admitted. "The tourism sector in Queensland obviously had a double whammy with the dollar and the floods." But it’s not all bad news, the economist stressed, saying the Barometer revealed areas of positivity. The majority of trade growth is occurring in China, India, Latin America (specifically Brazil), ASEAN and Africa. Harcourt says Australia is well positioned to take advantage of expanding markets in these countries. "That’s where we’re lucky, that’s where most of our future trade will be, so we’re in the right place at the right time. With the world moving towards China and Asia, it’s now about the power of proximity rather than the traditional tyranny of distance."


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