The value of Australian services exports is soaring, thanks largely to a continued influx of foreign visitors and students to our shores, along with a weaker Australian dollar.
In April, they topped $6.342 billion, the highest monthly figure on record. Compared to a year earlier, they grew by 18.9%, a pace not seen since November 2000, shortly after the end of the Sydney Olympics.
As a result of this rapid growth, services now account for 24% of all Australian exports.
The chart below, supplied by Commsec, provides more than a little evidence that Australia’s economic rebalancing is finding traction.
Craig James, Commsec’s chief economist, describes the surge in services exports as a “silent boom”, nominating China — better known as the end destination for many of Australia’s commodity exports — as the main factor behind the recent acceleration.
“In part, the boom is in response to a lower Aussie dollar, but it is also due to China,” says James. “China (including Hong Kong) went past New Zealand in March to be our largest source of tourists. Chinese tourists have doubled in the past five years to a 1.33 million annual rate.”
That enormous growth — not only from China but other nations — has seen the value of Australian tourism exports surge by 21.7% over the past 12 months, a truly enormous figure over such a short period time.
Coincidentally, it almost identically matches the increase in Chinese short term visitor arrivals in the year to March which jumped by 21.3%.
And James suggests the “boom has only really just started”, something that is hard to argue against given recent trends.
Markets will get a further indication on whether this trend is continuing with the Australian Bureau of Statistics scheduled to release international visitor arrivals data for April on Friday.
In March, 666,000 visitors graced Australia’s shores, the highest monthly total on record. That left total short term arrivals over the past year at 7.61 million, again an all-time record high.