Trade tipped to take hit

Townsville Bulletin - - Inside Today - by Steve Lewis

JA­PAN’S deadly earth­quake and tsunami will cast a fur­ther pall over Aus­tralia’s econ­omy as the Gil­lard Gov­ern­ment pre­pares its cru­cial May bud­get.

The lat­est nat­u­ral disas­ter to hit the Asia-Pa­cific is likely to cause fur­ther harm to the Aus­tralian econ­omy, al­ready un­der pres­sure fol­low­ing the dev­as­tat­ing Queens­land floods.

And the re­sources sec­tor, which has been a stand-out in Aus­tralia’s re­cent econ- omic surge, is likely to par­tic­u­larly feel the blow­back as Ja­pan’s in­dus­trial ca­pac­ity takes a hit.

Aus­tralia’s stel­lar econo m i c g r o w t h h a s b e e n un­der­pinned by a surge in com­mod­ity ex­ports to Asian gi­ants in­clud­ing Ja­pan and China.

Econ­o­mists last night pre­dicted the 8.4 mag­ni­tude earth­quake will have flow-on ef­fects for the econ­omy.

‘‘ Ob­vi­ously to the ex­tent that it will knock off in­dus­trial ca­pac­ity ( in Ja­pan), then that hurts us,’’ said Chris Richard­son, part­ner w i t h C a n b e r r a - b a s e d Deloitte Ac­cess Eco­nom­ics.

‘‘ Yet again, a nat­u­ral disas­ter is a prob­lem for Aus­tralia.’’

Asi a n mar­kets r e a c t e d s w i f t l y t o t h e m a s s i v e tremor. Ja­pan’s share­mar­ket closed some 1.7 per cent lower and Nikkei fu­tures fell 3 per cent in af­ter-hours trad­ing in Sin­ga­pore as the scale of dam­age be­came ap­par­ent.

T h e J a p a n e s e d i s a s t e r c o m e s a w e e k a f t e r Trea­surer Wayne Swan con­ceded the re­cent spate of nat­u­ral dis­as­ters in Aus­tralia would see eco­nomic growth slow in the March quar­ter.

‘‘ They will take a heavy toll on out­put and will take a heavy toll on our bud­get,’’ Mr Swan said, of the floods in south-east Queens­land and Cy­clone Yasi.

For the past 50 years, Ja­pan has been Aus­tralia’s best in­ter­na­tional cus­tomer with two-way trade of just un­der $ 60 bil­lion.

Ex­ports, par­tic­u­larly of coal and iron ore, have been a stand-out in our terms of trade with the Asian gi­ant, soar­ing to around $ 40 bil­lion a year.

Coal ex­ports alone were worth around $ 13 bil­lion a year while iron ore con­trib­utes $ 6 bil­lion in an­nual rev­enues.

This has helped to un­der­pin Aus­tralia’s eco­nomic re­silience and buf­fer the econ­omy from the worst ef­fects of t h e g l o b a l f i n a n c i a l melt­down.

While the Ja­panese earth­quake is ex­pected to see a fur­ther short-term hit to A u s t r a l i a ’ s e c o n o m i c growth, econ­o­mists were loathe to pre­dict the im­pact last night.

And some econ­o­mists say while the Aus­tralian econ­omy will suf­fer a short-term hit, the ‘‘ re­build­ing’’ phase will ac­tu­ally ben­e­fit our com­pa­nies, par­tic­u­larly in the re­sources sec­tor.

Min­er­als in­dus­try fig­ures last night were also un­cer­tain about the im­pact on Aus­tralia’s re­sources sec­tor. Ja­pan’s en­ergy sec­tor, which re­lies partly on Aus­tralian coal, could face some dis­rup­tions.

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