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

Video In US, Columbus Day Still Generates Controversy

Holiday marks date Columbus discovered Americas, but some are offended by legacy because he enslaved many natives he encountered More

Video Through Sports, Austria Tries to Give Migrants Traction

With 85,000 people expected to claim asylum in Austria this year, its government has made integration through joint physical activities a key objective More

Video Kickboxing Champion Shares Sport With Young Migrants

Pouring into Europe by hundreds of thousands, some migrants, especially youngsters, are finding sports a way to integrate into new host countries More

This forum has been closed.
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.
Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemeni
Henry Ridgwell
October 12, 2015 4:03 PM
The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemen

The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video No Resolution in Sight to US House Speaker Drama

Uncertainty grips the U.S. Congress, where no consensus replacement has emerged to succeed Republican House Speaker John Boehner after his surprise resignation announcement. Half of Congress is effectively leaderless weeks before America risks defaulting on its national debt and enduring another partial government shutdown.

Video New Art Exhibit Focuses on Hope

Out of struggle and despair often comes hope. That idea is behind a new art exhibit at the American Visionary Art Museum in Baltimore, Maryland. "The Big Hope Show" features 25 artists, some of whom overcame trauma and loss. VOA’s Deborah Block reports.

Video Columbus Day Still Generates Controversy as US Holiday

The second Monday of October is Columbus Day in the United States, honoring explorer Christopher Columbus and his discovery of the Americas. The achievement is a source of pride for many, but for some the holiday is marked by controversy. Adrianna Zhang has more.

Video Anger Simmers as Turks Begin to Bury Blast Victims

The Turkish army carried out new air strikes on Kurdistan Workers Party (PKK) targets on Sunday, a day after the banned group announced a unilateral cease fire. The air raids apparently are in retaliation for the Saturday bombing in Turkey's capital Ankara that killed at least 95 people and wounded more than 200 others. But as Zlatica Hoke reports, there are suspicions that Islamic State is involved.

Video Bombings a Sign of Turkey’s Deep Troubles

Turkey has begun a three-day period of mourning following Saturday’s bomb attacks in the capital, Ankara, that killed nearly 100 people. With contentious parliamentary elections three weeks away, the attacks highlight the challenges Turkey is facing as it struggles with ethnic friction, an ongoing migrant crisis, and growing tensions with Russia. VOA Europe correspondent Luis Ramirez reports.

Video Afghanistan’s Progress Aided by US Academic Center

Recent combat in Afghanistan has shifted world attention back to the central Asian nation’s continuing civil war and economic challenges. But, while there are many vexing problems facing Afghanistan’s government and people, a group of academics in Omaha, Nebraska has kept a strong faith in the nation’s future through programs to improve education. VOA’s Greg Flakus has more from Omaha, Nebraska.

Video House Republicans in Chaos as Speaker Favorite Withdraws

The Republican widely expected to become the next speaker of the House of Representatives shocked his colleagues Thursday by announcing he was withdrawing his candidacy. The decision by Majority Leader Kevin McCarthy means the race to succeed retiring Speaker John Boehner is now wide open. VOA National Correspondent Jim Malone reports.

Video German, US Officials Investigate Volkswagen

German officials have taken steps to restore some of the reputation their car industry has lost after a recent Volkswagen diesel emissions scandal. Authorities have searched Volkswagen headquarters and other locations in an effort to identify the culprits in the creation of software that helps cheat on emission tests. Meanwhile, a group of lawmakers in Washington held a hearing to get to the bottom of the cheating strategy that was first discovered in the United States. Zlatica Hoke reports.

Video Why Are Gun Laws So Hard for Congress to Tackle?

Since taking office, President Barack Obama has spoken out or issued statements about 15 mass shootings. The most recent shooting, in which 10 people were killed at a community college, sparked outrage over the nation's gun laws. But changing those laws isn't as easy as many think. VOA's Carolyn Presutti reports.

Video In 'He Named Me Malala,' Guggenheim Finds Normal in Extraordinary

Davis Guggenheim’s documentary "He Named Me Malala" offers a probing look into the life of 18-year-old Malala Yousafsai, the Pakistani teenager who, in 2012, was shot in the head by the Taliban for standing up for her right to education in her hometown in Pakistan's Swat Valley. Guggenheim shows how, since then, Malala has become a symbol not as a victim of brutal violence, but as an advocate for girls’ education throughout the world. VOA’s Penelope Poulou has more.

Video Paintable Solar Cells May Someday Replace Silicon-Based Panels

Solar panels today are still factory-manufactured, with the use of some highly toxic substances such as cadmium chloride. But a researcher at St. Mary’s College, Maryland, says we are close to being able to create solar panels by painting them on a suitable surface, using nontoxic solutions. VOA’s George Putic reports.

VOA Blogs