Australian services sector to strengthen, resource earnings holding well

SYDNEY – Australia’s resources sector remains the principal driver of exports, even as the mining investment boom winds down, but there is growing recognition that a broader-based export effort will be required for Australia to maintain a strong balance of payments, according to a new report from Australia’s Export Finance and Insurance Corporation (EFIC).

EFIC’s senior economist, Cassandra Winzenried, says that in the non-mining sector, service export growth is expected to increase after a lengthy period of weakness, with education and travel exports expanding sharply - spurred by a weaker Australian dollar and accelerating global activity. Australian exporters are also becoming more optimistic.

In the resources sector itself, the outlook remains strong, with rapidly- expanding volumes expected to support resource export earnings despite continued softness in prices, she says.

Iron ore shipments to China from Port Hedland reached a record high in April — 50% up on a year before. “As new capacity comes online, strong increases in iron ore and LNG volumes will offset lower prices — which in any case are expected to settle 50% higher than their long-run average by mid-2016.” See Export Monitor  www.efic.gov.au (ATI).