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

Photogallery Pistorius Sentenced, Taken to Prison

Pistorius, convicted of culpable homicide in shooting death of girlfriend Reeva Steenkamp, will likely serve about 10 months of five-year sentence, before completing it under house arrest More

UN to Aid Central Africa in Polio Vaccinations

Synchronized vaccinations will be conducted after Cameroon reports a fifth case of the wild polio virus in its territory More

WHO: Ebola Vaccine May Be in Use by Jan.

WHO assistant director Dr. Marie Paule Kieny says clinical trials of Ebola vaccines are underway or planned in Europe, US and Africa 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.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid