You hear a lot about Australia’s “economic transition” as the mining boom fades and the country needs other parts of the economy to step up and fill the gap.
Here’s a chart from a recent note by ANZ that dramatically illustrates how that transition is underway.
There are a few things going on here. First, services and agricultural exports (on the right hand vertical axis) now total around $10 billion combined each quarter. Demand from Asia that has picked up in recent years, especially from China, have helped both of these expand.
Add in manufacturing and it comes to a ball park $13 billion. That’s roughly the size of the mining export sector.
It effectively shows the transition of the economy in a single chart.
It’s also a great illustration of how the lower Australian dollar, which has been falling steadily for around four years, helps to increase sales of non-mining exports.
There are a few other elements to consider. The future of the economy lies in services exports like tourism, education, health and financial services which have shown the most steady growth over the past decade. Rural exports are a crucial component as well. Manufacturing, meanwhile, is comparatively flat in terms of growth.
It underscores that services – requiring a skilled workforce and world-class innovation – are the future of Australia’s ability to export its products to the rest of the world.
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