AUD: Lower Commodity Prices Mask Iimproved Trade Integration with East Asia - NAB
AUD: Lower Commodity Prices Mask Iimproved Trade Integration with East Asia - NAB
Research Team at NAB surveyed Australian business integration with East
Asia in September 2014 and China in December 2015 and noted that the
recent headline trade data indicate a reversal in the decades-long
process of growing integration with our region as exports have declined.
Key Quotes
“However,
as the series of product line case studies presented here shows, the
headline export numbers give an unduly gloomy picture. As the stimulus
of record export prices inevitably passed, commodity revenues fell. This
masked ongoing progress in lifting commodity export volumes,
diversifying the commodity base and lifting earnings in services trade.
The fall in the $A (from above US dollar parity) that accompanied
falling commodity prices has lifted our competitiveness in manufactures
and services, helping support trade volumes.
Paradoxically,
therefore, long term fundamentals for increased integration have
improved at the time export earnings have shrunk. The lower $A is
boosting market opportunities in key sectors like agribusiness and
tourism, already facing favourable prospects as income growth across
East Asia changes dietary and leisure patterns. There is still work to
be done on removing market access restrictions, despite free trade
agreements, improving our efficiency to out-compete low cost rival
suppliers and diversifying our product and market export profile in East
Asia to limit reliance on a limited range of markets and products.
The bottom line:
Export revenues have been hit by the withdrawal of the sugar hit of the
commodity price boom but the deeper process of integration continues.”
