Whilst Australia may be an island in the southern hemisphere, known for its sun, surf, and reef life, it’s fast becoming an integral part of the global export movement. Predominantly trading with its closest neighbours China, Japan, and New Zealand, its exports to countries like the United Kingdom and the United States remain important, but not as vital.
But what’s driving the increase in exports and how is it impacting the average Australian citizen?
Exports and imports
Australia is a country with no shortage of natural resources and it’s these commodities that equate to the large volume of exports. Iron Ore ($79.6B), Coal Briquettes ($36.4B), Petroleum Gas ($2.6B), and Gold ($17.7B) are just some of the most lucrative trades, whilst imports include cars ($13.7B), Refined Petroleum ($10.8B), and Gold ($6.49B).
The majority of countries that Australia trades with are two-way, with an equal number of imports and exports. Ultimately, a growing export sector creates more revenue to import goods and services, which helps the economy grow.
Australia’s position as a Western nation in Asian territories has proven beneficial to the country in recent years. As countries like India, North and South Korea, Thailand, and of course China began to emerge/strengthen their position on the global economic stage, Australia’s key geographical position has made her a natural trade ally, whilst providing these countries with access to Western trade.
Traditionally, Australia was renowned for its agricultural and mining exports. However, as countries around the world looked for alternatives to fossil fuels, Australia has learned to diversify its exports. Alongside its natural commodities, Australia now exports knowledge-intensive services like biotechnology and software.
Drive in demand
The drive in demand for Australian exports has had a positive overall effect on the economy, with revenue and investment spilling over into the domestic economy. This has resulted in not only an increasing number of job opportunities but also an increased demand for higher wages.
Performance of the AUD
Despite the pandemic and Australia’s staunch stand on keeping its borders closed, the Australian dollar is gaining in strength and has even outperformed the US dollar hitting a 4-month high above 74 cents. The strength of the currency has seen more forex traders looking to pair the AUD, which is also increasing its strength.
It’s not just against the USD that the AUD has seen gains, but against the euro and pound sterling, further cementing Australia’s place on the global export market.