ID :
39728
Fri, 01/09/2009 - 18:51
Auther :
Shortlink :
https://oananews.org//node/39728
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US recession hits Aussie exporters
Australian businesses that export to the US are bracing for a tough year as the world's biggest economy grapples with recession.
But Australia's trade commission, Austrade, says there is cause for optimism in the form of US president-elect Barack Obama's massive fiscal stimulus package.
Austrade senior trade commissioner Sally-Ann Watts said Australian companies could benefit from the US stimulus package, worth an estimated $US775 billion ($A1.09 trillion), with its emphasis on infrastructure such as bridges, roads and clean technology.
In the meantime, a company already feeling the pinch is Sydney-based Appen, a software publisher specialising in speech and language applications whose clients include IT giants IBM, Microsoft and Motorola.
Appen director Chris Vonwiller said the company generated about 50 per cent of its revenue from the US and it was impossible not to feel the impact of the US downturn.
"The slowdown in the private sector is significant for us," Mr Vonwiller said on Friday.
"If a large software company is cutting back on its product development, that disproportionately affects us.
"We're seeing this as a slower year than the previous year."
Appen, which exports 98 per cent of its product, also supplies the US departments of Defense and Homeland Security. Mr Vonwiller was cautiously optimistic the government sector would hold up better than the private sector.
He said the company was boosting research and development (R&D) in 2009, hoping to be in a position to take advantage when the economy picks up.
"It's well documented that companies that invest heavily in innovation during downturns do better when the economy recovers than those that didn't," Mr Vonwiller said.
Exports to the US - Australia's third largest export market - rose by 8.2 per cent in 2007/08, according to the Australian Bureau of Statistics.
Trade commissioner Sally-Ann Watts believed a similar if not better performance was possible this financial year, given last year's result was achieved despite a high Australian dollar.
"I think we may have a chance at maintaining our increase," Ms Watts said from Los Angeles.
"Things will get a bit slower. You will have to try harder to get it, but there are still great opportunities.
"People's risk appetite has reduced so the orders are smaller in size and taking longer to be signed, but the business is still happening."
Australian companies get a chance to show off their wares over the next fortnight during Austrade's annual "G'Day USA" festival.
It is the sixth time Austrade has run the initiative. Ms Watts said the theme had shifted from promoting mainly tourism and entertainment to a broader business focus.
Ms Watts said there was scope to do more trade-related events given the increasing familiarity of US people with Australia.
Australian Institute of Export executive director Ian Murray said he expected the manufacturing and services sectors to be hit hardest by the US downturn.
But Mr Murray said Australian companies could benefit from the clamour for further regulation of financial markets in the wake of the global credit crunch.
"If the world becomes more highly regulated, there are opportunities for Australian companies who have obviously been used to operating in a much more regulated market, to use their expertise in overseas markets," Mr Murray said on Friday.
A lower Australian dollar would help smaller exporters, particularly, who were more affected by the costs of their products overseas.
Moody's Economy.com senior economist Tu Packard said the US recession had "spread to nearly every industry, occupation, demographic group and region".
Ms Packard said falling asset prices had stripped $US7 billion from US household net worth in the 12 months to September last year.
"That, combined with weak income growth and rising unemployment, will keep consumption spending sluggish in 2009," Ms Packard said in a recent research note.
"With private consumption and investment spending in an absolute swoon, massive public sector spending is the last hope to stimulate demand."
But Australia's trade commission, Austrade, says there is cause for optimism in the form of US president-elect Barack Obama's massive fiscal stimulus package.
Austrade senior trade commissioner Sally-Ann Watts said Australian companies could benefit from the US stimulus package, worth an estimated $US775 billion ($A1.09 trillion), with its emphasis on infrastructure such as bridges, roads and clean technology.
In the meantime, a company already feeling the pinch is Sydney-based Appen, a software publisher specialising in speech and language applications whose clients include IT giants IBM, Microsoft and Motorola.
Appen director Chris Vonwiller said the company generated about 50 per cent of its revenue from the US and it was impossible not to feel the impact of the US downturn.
"The slowdown in the private sector is significant for us," Mr Vonwiller said on Friday.
"If a large software company is cutting back on its product development, that disproportionately affects us.
"We're seeing this as a slower year than the previous year."
Appen, which exports 98 per cent of its product, also supplies the US departments of Defense and Homeland Security. Mr Vonwiller was cautiously optimistic the government sector would hold up better than the private sector.
He said the company was boosting research and development (R&D) in 2009, hoping to be in a position to take advantage when the economy picks up.
"It's well documented that companies that invest heavily in innovation during downturns do better when the economy recovers than those that didn't," Mr Vonwiller said.
Exports to the US - Australia's third largest export market - rose by 8.2 per cent in 2007/08, according to the Australian Bureau of Statistics.
Trade commissioner Sally-Ann Watts believed a similar if not better performance was possible this financial year, given last year's result was achieved despite a high Australian dollar.
"I think we may have a chance at maintaining our increase," Ms Watts said from Los Angeles.
"Things will get a bit slower. You will have to try harder to get it, but there are still great opportunities.
"People's risk appetite has reduced so the orders are smaller in size and taking longer to be signed, but the business is still happening."
Australian companies get a chance to show off their wares over the next fortnight during Austrade's annual "G'Day USA" festival.
It is the sixth time Austrade has run the initiative. Ms Watts said the theme had shifted from promoting mainly tourism and entertainment to a broader business focus.
Ms Watts said there was scope to do more trade-related events given the increasing familiarity of US people with Australia.
Australian Institute of Export executive director Ian Murray said he expected the manufacturing and services sectors to be hit hardest by the US downturn.
But Mr Murray said Australian companies could benefit from the clamour for further regulation of financial markets in the wake of the global credit crunch.
"If the world becomes more highly regulated, there are opportunities for Australian companies who have obviously been used to operating in a much more regulated market, to use their expertise in overseas markets," Mr Murray said on Friday.
A lower Australian dollar would help smaller exporters, particularly, who were more affected by the costs of their products overseas.
Moody's Economy.com senior economist Tu Packard said the US recession had "spread to nearly every industry, occupation, demographic group and region".
Ms Packard said falling asset prices had stripped $US7 billion from US household net worth in the 12 months to September last year.
"That, combined with weak income growth and rising unemployment, will keep consumption spending sluggish in 2009," Ms Packard said in a recent research note.
"With private consumption and investment spending in an absolute swoon, massive public sector spending is the last hope to stimulate demand."
