Back in June of this year I commented that Europe would become increasingly irrelevant to Australia’s interests, and that the sooner we embraced our place in the new economic powerhouse, the better. I’m referring to the Asia-Pacific region including the Americas (North and South), Asia (East, South and South-East) as well as Oceania. While the USA is still somewhat of a fiscal lame duck it certainly has more economic potential than Europe which looks quite likely to wallow in the Global Financial Crisis doldrums for some considerable time.
Australia has managed to survive and grow throughout the GFC, primarily due to the demand for our minerals, the prompt fiscal stimulus and because our banks, being subject to much tighter regulation, didn’t invest too deeply in dubious derivatives. Our economic linkages with the Asia-Pacific region have helped to sustain our economy. A very good reason why we should focus more on this relationship than one with Europe. Here are a few factoids to help justify this particular argument.
The Asia-Pacific region, especially in South-East Asia has an ever increasing middle class, all demanding the benefits that a greater income can provide. Some 70% of the people on this planet reside in the Asia-Pacific region. That was 4.73 billion people in 2009. The GDP of this region is some 53.2% of the world GDP. That’s a healthy and growing GDP.
Some 81.3% of Australia’s merchandise exports in 2009 were to the Asia-Pacific region and 70.2% of our imports came from the same place. That’s a pretty healthy chunk of our economic parameters. In comparison only 9.3% of our exports went to Europe and 21.1% of our imports came from there.
A comparison between 1990 and 2009 shows that by 2009 our exports to Europe had fallen from 17.1% to 9.3% and European imports had fallen from 27.5% to 21.1% in 2009. Maybe Europe needs us more than we need them. In contrast exports to Asia had risen from 50.6% to 68.7% and imports from 32.4% to 50.9% by 2009. Maybe we need the Asia-Pacific as much as they need us.
Is it time to cut the apron strings with the UK and Europe and look to becoming part of the rising Asia-Pacific economic powerhouse? I think so. How about you?
For more information see the Asia Development Banks 41st edition of “Key Indicators for Asia and the Pacific 2010”.