When discussion turns to Australian exports, most people immediately think of commodities, particularly iron ore, coal and more recently, LNG. It’s an understandable reaction given Australia’s long-standing reputation as a major commodity exporting nation.
But it’s not just about commodities. The nation’s natural beauty, well-regarded education system and proximity to Asia, along with a lower Australian dollar, has seen the value of education and tourism exports surge in recent years, helping to boost local employment and economic growth.
According to Kirk Zammit and Justin Fabo, members of ANZ’s economic team, the combined value of the two was worth nearly as much as l Australia’s largest goods export last year, iron ore.
“Travel services exports – education, tourism and business travel – account for 60% of Australia’s total services exports and 14% of total exports,” said the pair before the release of today’s Australian international trade report, which revealed a larger-than-expected trade deficit for February.
“By value, total education and tourism related exports in 2015 were $42 billion, only a little below the value of iron ore exports.”
The table below, supplied by ANZ, reveals the value of Australia’s major export items last year. At $19.2 billion and $15.8 billion respectively, the value of education and tourism exports ranked third and fifth in terms of dollar value in 2015.
In terms of GDP contribution, they added more than 0.2 percentage points to Australian economic growth in 2015, remembering that the economy grew by 3.0% in the 12 months to December 2015.
The chart below, also supplied by ANZ, reveals the contribution to Australian GDP by travel-orientated services exports.
Though significant contributor to economic growth, Zammit and Fabo suggest recent strength in the Australian dollar “raises the risk of an earlier and sharper slowing in net services exports”.
“There is already some evidence of a pick-up in Australians holidaying overseas. Further, growth in education exports has already slowed and this looks set to continue this year,” they note.
Though the Australian dollar may lead to a loss in momentum in services exports, they remain optimistic on the outlook for inbound tourism, particularly from China.
“A significant share of the very sharp pick-up in inbound Chinese tourism over (the past 18 months) is unlikely to have been currency driven,” say Zammit and Fabo.
Later this week the ABS will release updated overseas arrival and departures figures for February.