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Trade and investment

Caption below

The APL Ivory leaves Port Melbourne with Australian rice
AusAID

Australia’s trade in goods and services was valued at almost $311 billion in 2003–04, or 1 per cent of total world trade. Overall, Australia’s largest trading partners were Japan, the United States, China, the Republic of Korea, New Zealand and the United Kingdom.

Australia’s exports of goods and services have grown in value terms on average over 7 per cent per year over the last 10 years since 1993–94. In a difficult global environment Australian exports of goods and services were valued at $143 billion in 2003–04, about 18 per cent of the country’s GDP.

Australia’s exporters are spread across all sectors of the economy. Although Australia’s exports of commodities remain strong, new services and sophisticated manufacturing export markets have emerged.

Goods and services both feature as major exports for Australia. The major merchandise and service exports (in billions of dollars) in 2003-–04 were as follows:

Coal

$10.9

Personal travel (other than education-related)

$10.2

Education-related travel

$6.0

Non-monetary gold

$5.7

Iron ore

$5.2

Crude petroleum

$4.6

Passenger services

$3.9

Bovine meat

$3.9

Aluminium

$3.8

Aluminium ores

$3.7

Wheat

$3.4

Passenger motor vehicles

$2.9

Alcoholic beverages

$2.6

Wool

$2.5

The top five markets for goods and services were Japan ($23.1 billion); the United States ($14 billion); China ($11.1 billion); New Zealand ($10.5 billion); and the Republic of Korea ($9.4 billion).

Australia’s major import items included passenger motor vehicles, personal travel, crude petroleum, freight services and computers. The United States was Australia’s largest source of imports, followed by Japan and China.

Did you know?

Australia is the world’s fourth-largest exporter of wine, after France, Italy and Spain. In 2003–04 exports topped $2.4 billion. The period 1996 to 2003 has seen spectacular growth in Australian wine exports following rapidly increasing appreciation of Australian wines overseas. Major wine producers from abroad have invested in Australian wineries, and Australian companies have taken controlling interests in wineries in countries such as France and Chile.

Supplier of advanced manufactures

Caption below

Craypots on Victoria Dock, Hobart: Tasmanian fresh and artisanal produce is world-renowned
Geoff Murray/Tourism Tasmania

Australia has developed new strengths as a supplier of advanced goods and services. In 2003–04, elaborately transformed manufactures accounted for around 70 per cent of total manufactured exports.

Over the past decade, exports of elaborately transformed manufactures (ETMs), with high levels of value adding, have grown at an average annual rate of 6.1 per cent. Products such as components for mechanical and electronic equipment and assembled motor cars have recorded strong growth in the last decade. Australia is also developing a new competitive edge in high-technology exports, such as scientific and medical equipment.

Export successes in the advanced manufacturing sector include exporting motor vehicles to the Middle East, the United States, New Zealand, South Africa and Brazil; and design and manufacture of sophisticated radio-frequency products for use in wireless communications systems.

In fact

Motor vehicle exports have grown fivefold since 1993–94, expanding into markets such as the Middle East, where cars built for Australia’s rugged conditions have a clear advantage. Since 1993–94 exports of motor vehicles have increased by an average of 21 per cent per annum and in 2003–04 were worth $2.7 billion.

Medical equipment: Since 1993–94, there has been an 11-fold growth in exports of respiration equipment, worth $177 million in 2003–04. Hearing aid exports have increased tenfold since 1993–94 to $96 million in 2003–04. Exports of syringes, needles, catheters and cannulae used in hospitals have increased 35 per cent.

Primary products

Australia’s traditional export strengths—primary products in agriculture, minerals and energy—continue to make a strong contribution to national prosperity.

Increasingly, Australia exports its primary products in processed form, reflecting greater sophistication in the export mix. Factors driving growth and change over the past decade include diversification in production and consumer markets, innovation, value-adding at source, and growing international demand for processed food and beverages.

Despite widespread drought, an uncertain international economic environment and currency movements putting the brake on performance in 2002–03, exports of Australian primary products have grown by an average 5.5 per cent a year since 1998–99.

Services

In 2003–04 services exports reached $34 billion—24 per cent of total exports. Personal travel and passenger services exports were valued at $14.1 billion—9.8 per cent of Australia’s total export earnings. Education, professional, communications, insurance and financial services exports broke the $11 billion barrier in 2003–04. Exports of information and communications technology (ICT) services generated $2.2 billion in 2003–04.

Australia’s travel exports have surged over the past decade. With over five million international visitors per year, tourism is Australia’s largest services export industry. International visitors to Australia consumed around $17.1 billion worth of goods and services in 2003–04, a total of 11.9 per cent of total export earnings. By 2013, the industry is expected to generate around $27.9 billion in export earnings and attract up to eight million visitors.

In 2003–04, education services exports continued to be a particularly strong performer, reaching around $6 billion. Enrolments by full-fee overseas students in Australia totalled 303 324 in 2003, with most enrolment growth in the higher education and schools sectors. Australia has the third-largest number of international students in the English-speaking world, behind the United States and the United Kingdom. More than 94 per cent of students in the top 10 source countries are from Asia.

In fact

Australia was ranked the third most technology-savvy country in the world in the most recent Globalisation Index (conducted for Foreign Policy by consulting firm A.T. Kearney)

Australia’s exports by sector ($m)

 

2001–02

2002–03

2003–04

Agriculture

32 729

28 385

27 380

Mining

39 891

38 332

35 348

Manufactures

37 530

35 645

32 913

Other

10 973

13 118

13 395

Services

32 250

32 943

33 958

Total exports

153 373

148 423

142 994

Austrade—the Australian Trade Commission—is the Australian Government’s international trade and investment facilitation agency. Austrade assists international buyers of goods and services to develop trade and investment connections with Australia, and assists Australian businesses to increase their exports. Austrade helps companies reduce the time, cost and risk involved in doing business overseas.

Foreign investment

Australia welcomes inward foreign investment and recognises it as an important element in developing competitive industries, creating jobs and increasing exports. Foreign investment in Australia at June 2004 totalled $1058 billion.

Similarly, foreign investment offshore is vital to the development of regional and global marketing strategies of Australian firms and enables access to global business networks. Australian investments abroad at June 2004 totalled $557 billion.

Invest Australia, the Australian Government’s investment attraction and facilitation agency, promotes Australia as a competitive investment location. With investment specialists in 14 locations worldwide, it offers a range of services and programs to potential investors, including major project facilitation, immigration assistance, site visits, identification of potential joint venture partners, and advice on government industry assistance schemes and incentives.

In fact

Australia jumped from 19th to 7th most attractive investment location in the world in 2004 in AT Kearney’s Foreign Direct Investment Confidence Index.

According to the United Nations Conference on Trade and Development’s World Investment Report 2004, Australia, by attracting US$8 billion in foreign investment in 2003, ranked among the top four countries in the Asia Pacific region, ahead of other major countries in the region, including Japan and the Republic of Korea.

Australia in world financial circles

Australia has become a significant player in the global financial industry as a result of its strong domestic and international economic record.

The Australian Stock Exchange is the second-largest equity and options exchange in the region (after Tokyo), and the Sydney Futures Exchange (SFE) remains the largest and most innovative in the region. Annual turnover at the SFE exceeds 54 million contracts.

Of debt securities markets in the region, Australia’s is the second most sophisticated and liquid (after Japan), with a diverse range of products traded. Australia is also home to one of the largest managed investment markets in the Asia Pacific region, with total funds under management currently in excess of $767 billion.

Australia is being recognised increasingly as a regional financial centre, with:

Did you know?

Australia’s trading day spans the close of business in the United States and the opening in Europe. The Australian Stock Exchange has a market capitalisation of more than US$530 billion.

Australia has the highest percentage of shareholders in the world. Almost 54 per cent of the adult population own shares in publicly listed companies.

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Last update May 2005