While visiting Australia last week Japan’s Prime Minister Shinzo Abe signed a free trade agreement which, according to Peter Jolly, NAB’s global head of research, won’t change the trade rankings but it will up the importance of the Japanese economy.
“This agreement won’t change the rankings, China #1, Japan #2, and South Korea #3, Japan will lift its share materially in coming years as its purchases of LNG step up from Australia’s new projects. So while China will continue to be super important, Japan will reassert its economic importance,” Jolly said.
But the chart which accompanied this statement brings Australia’s northern Asian trading partners, particularly China, into focus.
Jolly noted, “Remember too that while China’s importance to trade is undoubted, Australia’s services and cultural links continue to rise. The chart below shows that a year ago China overtook the UK to become the second largest source of short term visitor arrivals to Australia and could overtake NZ within coming years.”