Australia's Exports Narrow to Levels Near 'Banana Republic'

'Banana Republic'


[link to www.bloomberg.com]

Australia's export base has narrowed to levels approaching that of a "banana republic,'' a former government adviser says, raising the specter of the country's economic nadir almost 30 years ago.

The concentration of shipments abroad is at the highest level in more than 50 years, according to Andrew Charlton, who counselled former Prime Minister Kevin Rudd on economic policy. The nation's budget is "hostage'' to global iron ore prices, with a $10 drop taking up to A$10 billion from forecast revenue, he said.

The global iron ore price has dropped more than $12 in the past month, further exposing Australia's lack of export alternatives.

"Australian governments have been operating on the assumption that, once the mining boom passed, low interest rates and a falling dollar would be enough to bring the non-resource sectors dancing out of their graves," Charlton, now director of consultancy AlphaBeta, said in a research report. "Unfortunately, no such resurrection is occurring."