Clouds gather on Asian horizon

WA is maintaining its beach mat in the economic sunshine with a stellar export performance, which rose 17 per cent to $25.4 billion in the year to June 30.

Continued strong exports boosted by a weak dollar, should enable the State to cruise into 2001 with economic growth expanding at more than four per cent.

However, it may pay to keep a wary eye on dark clouds gathering over Asia. If oil prices remain much above $30 a barrel, trade surpluses around the region will be severely crimped.

Their dominant exports of semiconductors and electronic products are beginning to wilt as global demand throttles back.

Dearer fuel is likely to raise Asia’s combined oil import bill by about US$20 billion in 2001, according to Bill Belchere, chief economist in the Singapore office of Merill Lynch. Only Indonesia, Malaysia and Brunei are net exporters of oil and gas.

South Korea recently overtook the US to become our second most important overseas customer behind Japan. Korea is the sixth largest oil user in the world. Its energy bill has already doubled to more than US$22 billion so far this year.

The Seoul stock market is tumbling and the Government has begun pumping in funds to prop it up. Although the latest numbers still show industrial production running seven per cent up, the country may be facing a hard landing next year.

Taiwan, sixth among WA’s export partners, is in deeper trouble. The new government of President Chen Shui-bian cannot get its reform plans past the opposition-dominated Legislature. Money has been leaving the country at a rapid clip and the stock market has sunk to a four-year low.

Fortunately there are encouraging signals from Japan, our biggest export market worth $6.58 billion, or 26 per cent of the total. Japanese imports surged 16.8 per cent in September on increased domestic demand. That raises hopes that the decade-long recession might finally be coming to an end and replaced by two per cent real growth next year.

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