Report highlights fragile economy
AUSTRALIA’ S economic complexity is on par with that of developing economies such as Kazakhstan, Cambodia and Kenya, the nation’s chief economist has warned.
The tyranny of distance also continues to hamper economic development, with Australia the least integrated into global supply chains of any developed economy.
The findings are delivered in a report, to be released today by the Office of the Chief Economist, assessing globalisation and Australian trade.
“Australia is an outlier among developed nations when it comes to global trade, mainly supplying raw materials with limited participation in the production of final goods,” acting chief economist David Turvey said. “This is partly due to geography.”
Australia’s economic complexity — a measure of the diversity of a nation’s exports and how many other countries ship out the same product — is the lowest of any economy in the developed world.
The report warns Australia’s reliance on commodity exports to a few key countries such as China leaves the nation exposed to trade shocks.
At the turn of the millennium, manufacturing was the nation’s biggest export industry, accounting for 40 per cent of exports by value.
Commodity exports — iron ore, coal and increasingly gas — now account for half of Australia’s exports as the mining sector has both ridden and fuelled the rise of China.
But the report notes an ageing population in Asia presents significant export opportunities in non-traditional trade areas such as aged care, health care and nursing services, as well as asset management and insurance.
A shift in how products are manufactured and assembled across the globe and a highly skilled workforce also offer new opportunities in advanced manufacturing, particularly by creating research and design hubs.
“The keys to unlocking new export opportunities for Australia lie in building advanced manufacturing capability and capitalising on Australia’s highly-skilled professional service industries,” Mr Turvey said.
“Australia has an opportunity to capitalise on growing services demand for an enriching and ageing Asia on our global doorstep.”