Tim Harcourt, The professor of Economics at University of New South Wales talks about the DHL Export Barometer.
The DHL Export Barometer is an initiative aimed at analysing export confidence in Australia and identifying export trends. It was first launched in November 2003 and is based on nationwide independent research, examining the business outlook of Australian exporters, highlighting changes in overseas market demand and providing insights into the factors impacting on Australia’s export trade. This year 785 Australian exporters took part in the survey.
DHL speaks to Tim Harcourt, JW Nevile Professor in Economics at University of New South Wales to get his thoughts on the hot topics from the 2012 DHL Export Barometer.
TE: What are the hot topics for Australian exporters as revealed in the Barometer?
Tim: Despite battling a high exchange rate abroad and anticipating a carbon tax at home, Australian exporters are coping successfully with international economic risk through innovation and a range of business strategies. Export confidence has bounced back after a significant dip in 2011 as businesses recovered from a world economy ravaged from the global financial crisis with half of exporters now expecting a profitable 12 months ahead. And the renewed confidence is not all about China. In fact in the 2012 results, Indonesia is the new rock star of export destinations, ASEAN as a whole is strong and New Zealand is proving resilient along with the Middle East (which had been adversely affected by a property slump in the UAE). Whist the high Aussie dollar is adversely affecting most exporters; they are using innovative approaches to deal with exchange rate related competitiveness pressures. 72 per cent of exporters now import (well up on the usual 40-45 per cent range), 34 per cent are using innovation and product/service refinement to cope with price pressures, 33 per cent are looking to new markets and 30 per cent are considering using alternative currencies.
TE: For the first time in the Barometer series, exporters were asked about the carbon price introduced on 1 July. What was surprising about their response?
Tim: A remarkable 90 per cent admitted they had not made any business plans for the introduction of the carbon price. As a result, 59 per cent said they’d deal with the carbon price by increasing their own prices. 61 per cent said the carbon price would adversely negatively impact export sales, 36 per cent said it would have no effect. Most (71 per cent) though the carbon price was ‘too high’. However, most exporters were not against government action on climate change with 51 per cent saying there should be some sort of government action whether it be an emission trading scheme, a carbon price or more research into alternative energy sources.
TE: The Barometer again shows how important Asia is to Australia’s export future. What countries were identified as future growth markets?
Tim: As per usual China, India, ASEAN and the emerging economies of Asia and the Middle East make up the top destinations where exporter are experiencing increased export orders. For the first time, Indonesia tops the table as the new poster child for export growth. This supports recent testimony of Australian businesses fearing well in the archipelago, experiencing some 30 per cent higher rates of return than in China or India. The Middle East has recovered too after the Dubai property slump and New Zealand has become the most popular current export destination for the first time. Companies looking at more innovating strategies are using New Zealand as a ‘test bed’ for new products and services before taking an ‘ANZAC’ trans-tasman approach into third markets in ASEAN and elsewhere in emerging markets like the Middle East and Latin America.
TE: The strong Aussie dollar and exchange rate worries don’t appear to have dented exporter confidence. Why is that?
Tim: One reason is that many exporters have also become importers (in 2012 it was 72 per cent compared to the usual 40-45 per cent range). Only 1 in 5 exporters hedge on the currency whilst 34 per cent undertake product and service refinement and innovation, 33 per cent aim to diversify markets and 30 per cent re-price in Australian dollars or alternative currencies. This also explains why business engagement is still strong in mature markets in North America and New Zealand as they are important to business innovation even if our major commodity markets are in China, India, ASEAN, the middle east and emerging markets.
View DHL Export Barometer Results
(Type: Acrobat Reader file, Size: 3.5 MB)
