China’s Future Growth to Further Shore-Up Aussie Exports
Australia's booming export trade will be further boosted in 2012, largely because of the country's steady and growing partnership with China and the possibility of growth in other markets.
The country breached the $28 billon mark August last year in total value of exports, according to the latest data provided by the Australian Bureau of Statistics (ABS) and that was sustained until the end of December 2010.
Though the value slightly dipped at $27.8 billion, the numbers were still impressive, economists said, and with the mining boom and other commodities that Australia consistently ships out, the country's export trading heads to further expansion, according to HSBC commercial banking chief James Hogan.
Over the next five years, Australia's trade partnerships with China, Japan and South Korea will continually grow while another country will emerge as a major market for Australian products - Thailand, Hogan said.
Backed by such healthy trading relations, HSBC has projected that Australia will experience annual export growth of at least seven percent over the next five years and those upward swings will be mostly fuelled by China's unrelenting expansion.
Hogan conceded though that the world's second biggest economy will face some form of challenges in the near term, possibly concentrated for the most part of 2012.
"There will be some volatility through 2012 in China but we anticipate a sustained and stable landing." Hogan told The Herald Sun.
But the Asian behemoth will shortly recover by 2014 and two years onward, Hogan is predicting that China will assume the distinction as number one trading nation in the world.
"It is only a matter of time before China becomes the world's biggest economy. We can already see the recovery coming in the export flows," Hogan said.
When that happens, China will have to purchase more of Australian products to feed both its industrial and commercial needs.
On the mining sector alone, more demands mainly from China will spur shipment growths of 15 percent for coal and 11.5 percent for iron ore over the next five years, HSBC said.
And with the Chinese middle class winning more purchasing power, Hogan expects agricultural products from Australia getting more attention, with the possibility that local produces will also dominate the global market.
"Exports will be a strong contributor to the Australian economy going forward and to succeed we need to look overseas for opportunities," Hogan said.
Hogan's forecast was supported by Citigroup, which predicted that China's economy would slow down a bit by up to nine percent this year but it will regain traction by the last quarter of 2012, thanks to the country's improving interest rates.
In general, Citigroup chief economist Willem Buiter expects the global economy to expand by 2.4 percent this year, pretty much defining the outside opportunities Hogan had laid out.