LNG is tipped to lead growth in Australian mineral fuels and base metals exports as Asian demand shifts.
According to a report by HSBC Global Connections, exports to Asia will diversify and change as the region urbanises in coming decades and consumer demands change.
The report said growth in Australian exports would shift from industrial commodities such as iron ore to mineral fuels, including LNG and base metals, to support more sophisticated consumer needs across Asia.
LNG and other fuels will contribute 39 per cent of overall total export growth over the next three years, topping the chart of Australian exports.
The fuels sector will continue to expand between 2015 and 2030, with expected export growth of 30 per cent.
Base metals are forecast to grow by 32 per cent to 2020 and a further 18 per cent up to 2030 as the sector leads export growth.
Mining and engineering equipment exports are also expected to benefit from maturing markets, contributing 35 per cent of export growth between today and 2030.
HSBC Global Connections said Australia’s niche resources-related industrial manufacturing could benefit from the region’s urbanisation provided it was supported by necessary investment in R&D.
It forecast that Asian markets would continue to lead the nation’s exports for the next 20 years as new markets joined Australia’s traditional trading partners.
Alongside the current export markets of Japan, China, India and South Korea, developing South-East Asian economies will grow in importance for Australia and change the nation’s export mix.
The report predicted annual growth of 5 per cent for Indonesia and 8 per cent for Vietnam out to 2030.
Malaysia is expected to replace the US as Australia’s fifth-largest export market by 2030, highlighting the rising economic power of the Asian region and its impact on Australian trade.
“The rise of Malaysia’s trade importance, along with the continuation of Australia’s trade links with China, Japan, South Korea and India, will see Australia’s top five export partners being all Asian for the first time,” HSBC Bank Australia state manager corporate WA, Craig Greenwood, said.
The report forecasts that the burgeoning Asian middle class is set to grow from 500 million currently to 1.3 billion by 2030 and 2.6 billion by 2050, driving the change in export goods into Asian markets.
While growth in mineral fuels and base metals is expected to be significant, the primary position of iron ore and other commodities in the export mix will continue despite a slowdown in export growth.
HSBC Global Connections is a report modelled by Oxford Economics and HSBC Global Research, which forecasts bilateral trade between 23 countries and global trade flows.