News / Asia

Australia's Economy Faces a Year of Challenges

Tourists take pictures in this long exposure photograph as the Sydney Opera House is lit with green lights during St Patrick's Day celebrations in central Sydney, March 17, 2010.
Tourists take pictures in this long exposure photograph as the Sydney Opera House is lit with green lights during St Patrick's Day celebrations in central Sydney, March 17, 2010.

Australia's resources-powered economy is facing a year of challenges.  Although the mining sector continues to soar, other industries - most notably manufacturing, tourism and finance - are shedding jobs in an increasingly two-speed economy.  Although Australia has managed to avoid the worst of the global economic crisis, the government warns that 2012 is likely to be a particularly tough year for employment.

Australia’s economy has been the envy of the developed world. But the "Wonder Down Under" is beginning to show a few cracks.

Strong currency

The strong Australian dollar is blamed for the loss of hundreds of jobs last month at Toyota in Melbourne, exposing the fragility of the country’s manufacturing sector.

"Shocking news for everybody, you know. For our families, you know, 350 people is really a lot," says a Toyota worker.

The Australian government says it is confident the economy will grow at a solid rate this year, although the Manufacturing Minister Kim Carr concedes that there will be some pain along the way.

The fact of the matter is that the high Australian dollar is causing great, great damage to our international markets, to our export program, because it is pushing the price up for Australian goods. And, as a consequence, the demand for Australian products is falling," said Kim Carr.

Mining boom

Australia avoided the worst of the global slowdown thanks to a mining boom fueled by sales of iron ore to China.  However, there are concerns that any easing of Chinese demand will cause problems.

"Australia is going to basically find that the global financial crisis that they thought they’d dodged is coming home to roost. Australia’s got problems on the commodity front through the Chinese slowing," said author and analyst Satyajit Das.

Das believes the soaring Australian dollar, which has doubled in value against its U.S. cousin in the past decade, is to blame for increased economic uncertainty.

"The high Australian dollar is obviously making things very difficult for manufacturers, for tourism, for health tourism, for educational services and we are now seeing signs of that in terms of the slackening demand for labor, particularly traditionally white collar areas, like in financial services," added Satyajit Das.

Higher unemployment ahead

Unemployment in Australia is at just above five percent. That figure is expected to rise this year. The non-mining sector is likely to suffer most. This week, 1,000 bank workers were told they were losing their jobs.

Fariborz Moshirian, a professor of finance at the University of New South Wales, believes Australia should not be so reliant on exports of commodities to China.

"There is no question that, if in China we are going to see a massive decline in economic activities," said Moshirian, "Australia is going to basically feel it very harshly simply because we don’t have a strong manufacturing or indeed banking sector to compensate for income losses associated with the mining boom. And, for that very reason [the] Australian economy requires a massive restructuring as we are benefiting from the mining boom so that our manufacturing, our financial services and our tourism industry will become more productive, more competitive and also our economy becomes more balanced rather than simply relying on one particular sector in the medium term." 

But the head of the New South Wales Minerals Council, Stephen Galilee, believes the resources sector will continue to underpin the economy for many years to come.

"People have been forecasting the end of the resources boom for many years now and the end of the boom is nowhere in sight," he said. "The impact of global uncertainty has the potential to slow the rate of growth of that boom. But we are optimistic that demand for our mineral resources will continue to increase across the decades ahead."

However, Australia’s miners are worried that a carbon tax will damage their international competitiveness and cost jobs. The levy will force many big polluters to pay for each ton of carbon dioxide they emit and is scheduled to be implemented in July.


You May Like

EU Court Fines Poland for Hosting CIA 'Black Sites'

Ruling is first time a court has acknowledged suspects were held and tortured at the sites, under US program launched following the 9/11 terrorist attacks More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

Video At AIDS Conference, Prevention Pill Stirs Excitement

Truveda shows promise, spurring debate over access and other approaches More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Treatment for Childhood Epilepsy Heats up Medical Marijuana Debatei
X
Shelley Schlender
July 24, 2014 6:43 PM
In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video Death Toll From Israel-Gaza Conflict Surpasses 700

Gaza officials say a shelling hit a compound housing a United Nations-run school in the Gaza Strip, killing more than a dozen people, during an Israeli offensive in the area. Heavy fighting between the Israeli military and Hamas militants continued on Thursday, pushing up the death toll. So far, more than 730 Palestinians and 35 Israelis have been killed in the conflict. VOA's Scott Bobb has the latest from Jerusalem.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Researchers Target Low-Cost Avatar Technology

Scientists at the University of Southern California Institute for Creative Technologies say 3-dimensional representations could revolutionize social media. Elizabeth Lee has more from Los Angeles.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid