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Sub-Prime and high dollar dent exporter confidence but China & India brightens horizons
Strong performance in the emerging economies, including future economic superpowers China and India, has provided some respite to Australian exporters who have been hampered by a record high exchange rate and the credit crunch in the USA. These are the key findings of the 2008 DHL Export Barometer.
The high dollar is now adversely affecting two-thirds of all exporters surveyed, compared with 50 per cent 12 months ago. Agricultural and manufacturing exporters are most affected by the exchange rate, whilst mining exporters are less affected due to the boom in commodity prices.
On the supply side, capacity constraints are not as big an issue as last year, although the cost of raw materials has become a major concern for exporters across the board. The tightness of the labour market is borne out by skill shortages and the expectation of large wage increases over the next 12 months, particularly in the resources sector.
The emergence of the sub-prime crisis in the United States has affected exporters going state-side, although it has not affected their view that North America is a good bet for exporters in the medium term. The strength of exporter confidence in the emerging economies also softened the impact of the credit crisis.
The DHL Export Barometer reports that Australian businesses are increasingly looking ‘beyond exporting’ to other forms of global engagement such as foreign investment, joint ventures and strategic alliances. In addition, many Australian exporters are also expanding their operations beyond our shores in order to take advantage of global supply chains.
That's the latest finding of the DHL Export Barometer survey for June 2008.
Tim Harcourt
Chief Economist
Australian Trade Commission
Sydney
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