Thursday, August 16, 2012

Plusses and minuses for the future of Australia's exports

Both the 2012 Annual Economic Roadshow run by the Export Council of Australia and the Export Finance and Insurance Corporation (EFIC) and the 2012 DHL Export Barometer flag plusses and minuses for the future of Australia’s exports.

Ian Murray, Executive Director of the Export Council of Australia who participated in both these programs said “that while Asia continues to provide strong opportunities for export growth, some sectors will continue to find it difficult due largely to the high dollar and the struggling European and US markets.”

“The fact that the DHL study reported that an increasing number of exporters expect their export orders to increase in 2012 was encouraging,” Mr Murray said “but what really matters most is whether these companies represented major exporters or the smaller end of the market.” 

Additionally, Mr Murray remarked that “it was also nice to read that 50% of those surveyed said their company profitability was forecast to increase, but that also means that 50% obviously thought profit would either stay flat or decline which is a concern.”

While the study showed that New Zealand replaced the UK as one of the five biggest destinations, more relevant was the fact that respondents recognised Indonesia and the Middle East as the biggest markets for growth.

“Indonesia,” Mr Murray said “should probably be viewed in the same light as both India and China when it comes to opportunity, as one cannot escape the fact that it has a rapidly growing 25 million middle class population, an economy growing at over 6% and has economically become much more stable in recent years. Food and protein will undoubtedly increase in demand as diets change and Western behaviours become more commonplace.”   
 
“The 2012 Economic Roadshow,” Mr Murray said “showed some similarities to the DHL study, particularly in relationship to Indonesia and the Middle East, but overall the optimism was clearly divided on geographic and sector dimensions. Europe and the US showed little immediate opportunity for solid export activity apart from niche business, while Asia continued to be strong. Food was undoubtedly seen as our strongest opportunity after resources while consensus was clearly shown for Australia to position itself as a provider of high value products and services.”

“Nobody,” he said “expected the dollar to fall far below parity, hence the continued spending on R& D and innovation was critical to building our future export businesses.”

Mr Murray said that “Drawing a line through both programs the export environment was certainly more encouraging than twelve months ago. Companies are either living with the higher dollar and the GFC, by implementing change to strengthen their margins or taking some production offshore. Growth in Asia and the Middle East is still uppermost in peoples’ minds and while it is tough right now, the future still remains positive."    

Ian Murray, Executive Director- Export Council of Australia

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