Australian businesses expect subdued trade activity over the next six months as concerns around the global outlook increase, according to HSBC’s latest Trade Confidence Index, but long-term demand from growing Asia will provide opportunities.
The index, which summarises the outlooks of more than 5,000 trade-exposed businesses, shows 54 per cent of exporters expect their sales volumes to decline or stagnate in the next six months.
More than a fifth of those expected weakness in their industries, triple the percentage just six months ago.
The index overall stands at 104, suggesting an anticipated expansion of trade, but is two points lower than in March, suggesting the expansion is slowing.
The report says this fall was caused by anxieties over government regulation and tighter credit.
In the longer term, strong resources demand will fuel export growth through to 2030.
The report estimated that iron ore and LNG will contribute nearly 60 per cent of export growth over this timeframe, up from 50 per cent over the past decade.
This effect will lead to a drop in the contribution of agricultural products to Australia’s trade, despite exports being forecast to more than double by 2030.
Indonesia is tipped to rise from fifth to third of countries importing agricultural products from Australia.
HSBC head of trade and receivables finance Andrew Skinnersais said exporters’ subdued expectations are symptomatic of the current global geopolitical situation.
“Falls in commodity prices – from coal and iron ore, to wheat, canola and wool – are also negatively weighing on exporter sentiment as prices have not been offset by the depreciation in the exchange rate as much as expected in order to boost confidence,” he said.
“Asia’s ongoing urbanisation is central to Australia’s export growth.
“Resources will continue to be the stand-out sector, but opportunities in agricultural exports will continue to grow as consumption patterns change.”
