Western Australian exporters expect a tough three months ahead as business adjusts to the impact of higher oil prices and exchange rate fluctuations, but the longer-term outlook remains strong.
Western Australian exporters expect a tough three months ahead as business adjusts to the impact of higher oil prices and exchange rate fluctuations, but the longer-term outlook remains strong.
This is one of the main findings of the latest DHL Export Barometer, a regular bulletin that tracks export sentiment across the country.
Of the states, only fellow resource-boomer Queensland has stronger long-term export confidence than WA, with 68 per cent of exporting companies expecting an increase in orders in the next 12 months.
In WA, 58 per cent of exporters are anticipating growth over the coming 12-month period.
However, despite the continuing prosperous condition of the state’s economy, WA companies involved in export trade are predicting a difficult period in the next three months.
This is evidenced by the fact that only 27 per cent of WA exporters are expecting an increase in business during the next three months, according to the DHL survey.
Aside from the broader issues of rising fuel prices and exchange rate movement, Austrade chief economist Tim Harcourt believes several other factors are contributing to the state’s pessimistic short-term export sentiment.
“The big thing that has been well documented in WA is the capacity constraints that cause delays in work flow and service delivery,” he told WA Business News.
“Business gets caught in short-term bottlenecks where ability to meet demand is restricted by skills shortages and other constraints, but they are able to work through these in the longer term.”
Mr Harcourt also points to what he refers to as a psychological factor in WA.
“The state is performing so well that companies tend to get to a point where they think that ‘this is as good as the conditions will get’, and as a result temper their expectations,” he said.
“But the ongoing strength of the economy with no real sign of a down-turn helps business look past the short term and realise that the resource-led boom in the state is still valid and ongoing.”
Supporting this view are industry sector results indicating that, Australia-wide, 67 per cent of companies in the mining sector expect export growth over the coming 12 months.
Also, continued strong demand has driven resource export sales nationally over the past 12 months.
China’s insatiable appetite for natural resources, most notably iron ore, has made it the destination where Australian exporters are most likely to experience growth during the coming year.
Data also shows that there has been a sharp rise in export orders to the Middle East.
In addition, ongoing demand for manufacturing exports is likely to encourage future investment in manufacturing capacity.
The DHL Export Barometer was developed to provide an indicator of exporter sentiment, something that was missing prior to its establishment.
