Analysts are looking to the services sector to drive the next phase of economic growth, amid a slowdown in resources investment and the collapse of key commodity prices.
Analysts are looking to the services sector to drive the next phase of economic growth, amid a slowdown in resources investment and the collapse of key commodity prices.
Service exports, such as education, information technology and tourism, could reach $163 billion annually by 2030, an increase of almost 135 per cent on 2013, according to a report by PwC and ANZ.
ANZ chief executive officer Mike Smith said the report found there would be opportunities for the service economy from the rise of Asia.
“With the right focus and supportive policies, we estimate related employment in value-added services exports to Asia could almost double by 2030, supporting over 1 million Australian jobs,” he said.
“Services drive most of Australia’s domestic growth, employing nine out of 10 people in the workforce while accounting for 75 per cent of GDP.”
To achieve a doubling of services exports to Asia, the report calls for an open Australian marketplace, acknowledging that recent free trade agreements are an important first step.
HSBC holds a similar view about the importance of services in the years ahead, with education and tourism currently growing thanks to the falling dollar, up by 11 per cent 8 per cent respectively in 2014.
“Much of the services sector is driven by local demand (think haircuts and doctors appointments),” HSBC chief economist Paul Bloxham said.
“But we expect services exports to be part of the rebalancing story too.
“While smaller than resources exports, services exports are still hefty, accounting for around 18 per cent of total exports, led by education and tourism.”
Business services, which include IT and financial services, were up 3 per cent in 2014, ahead of resources, according to HSBC.
As with resources, however, China is a key player in the education market, with almost 26 per cent of education exports destined to the Asian superpower.
The UK leads in tourism, however, at around 14 per cent.
A growing middle class with rising incomes will continue to drive demand from countries such as China, while India could yet have a tilt on the world stage.
“The region’s middle class is expected to grow from around 500 million today to 3.2 billion in 2030,” Mr Smith said.
“It is a huge opportunity for our services sector.”
WA import figures down
Western Australian merchandise imports for the year to March have fallen slightly compared with the same period last year, according to the Australian Bureau of Statistics.
The fall, of about $206 million, takes the 12-month rolling total to $34.8 billion, indicating that domestic demand is softening in WA.
The European Union is WA’s largest source for imported purchases, at around $4.9 billion in the past 12 months, up from $4.4 billion.
China ranked second, up from $3.8 billion to $4.6 billion, while Singapore was up from $3.7 billion to $4.2 billion.
But some other major partners took a tumble, with imports from Japan down from $2.9 billion to $2.1 billion, and the US falling from $3.1 billion to $2.8 billion.
Meanwhile, merchandise exports for WA are almost four times the level of imports, at $121 billion to the end of February, indicating the state is a key contributor to the nation’s trade balance.
Remembering Peter Walsh
Former Labor finance minister Peter Walsh was honoured at an event held last week by the Mannkal Economic Education Foundation in Subiaco.
Mannkal chief executive officer Paul McCarthy said Mr Walsh, who died on April 10, was a giant of Australian policy.
“He was instrumental in promoting the reforms of the Hawke-Keating governments which modernised Australia’s economy and unleashed the unprecedented growth in national wealth of the last two decades,” he said.
Two of Mr Walsh’s contemporaries, Peter Shack and John Hyde, paid tribute to the senator from Doodlakine at the event.
“(Mr Shack and Mr Hyde) saw first-hand how Peter’s hard-nosed and common-sense approach to public expenditure made him, contrary to the title of his famous book, perhaps Australia’s most successful finance minister,” Mr
McCarthy said.
Mr Walsh served as finance minister from 1984 to 1990 under prime minister Bob Hawke, and covered the period in his book Confessions of a Failed Finance Minister. He represented Western Australia in the Senate from 1974 to 1993. Also see Peter Kennedy, back page.
