Tuesday, November 23, 2010

Australian $22B ICT trade deficit

The Australian Computer Society released the 2010 Australian ICT Trade Update, by Professor John Houghton and Alison Welsh on 18 November 2010. The report shows a ICT trade deficit in excess of $22 billion for 2009.

Unfortunately, the report is provided as a 84 page 4Mbyte PDF file, making it difficult access. Here is the summary as HTML:
For Australia’s ICT trade, much of this decade has been one of a steady recovery from the ‘Dot Com’ downturn, but 2009 bears the scars of the Global Financial Crisis.

The ‘Dot Com’ downturn triggered a new wave of globalisation in the information and communication technology (ICT) industries with increasing specialisation along the value chain and the emergence of developing economies in both new production locations and new growth markets (e.g. China and India). In the early years of this decade, international investment flows focused on developing economies, on services rather than manufacturing and, in particular, on a range
of IT and ICT-enabled business services. Consequently, a new international division of labour has emerged, with the globalisation of services following a similar path to that previously seen in manufacturing.

As with many other sectors, the Global Financial Crisis and higher Australian dollar have caused a marked slowing in Australia’s ICT exports, although imports continue to grow. During 2009, Australia’s ICT exports fell by 11%, with ICT services exports falling by almost 7% and ICT equipment exports falling by 15% (in current prices). Preliminary analysis of ICT trade data for the first half of 2010 reveals evidence of further slowing – with equipment exports during the first four months down by the annual equivalent of 9%, and computer and information services exports in the first quarter of 2010 some 27% lower than first quarter 2009 (in current prices). Both first half year 2010 and Financial Year 2009-10 computer and information services exports are also down by around 15% to 20% on the previous periods.

Placing recent trade performance in this context, this report presents a detailed statistical update on Australia’s ICT trade over the decade 2000 to 2009 (inclusive). It explores the composition of ICT services, software, content and equipment trade, and identifies major export markets and import sources. It also examines ICT trade State-by-State. ...

Australia’s ICT Trade

ICT goods and services exports from Australia were worth almost $4.5 billion during 2009, well below the peak of $7.2 billion reached during the boom in 2000 (in current prices) ...

ICT exports fell from the peak in 2000 until 2005, after which exports increased a little in the following years (in spite of the
global downturn) before falling substantially again in 2009. Total ICT exports fell by 11% during 2009, with ICT equipment exports falling by 15% and ICT services exports by almost 7% (in current prices). ICT services exports continued to fall during the first two quarters of 2010.

However, with Australia’s comparatively strong economic performance during the Global Financial Crisis, ICT imports have continued to grow and cost almost $27 billion during 2009 ...

Consequently, Australia’s ICT trade deficit exceeded $22 billion during 2009 – increasing by $755 million during the year, and by more than $6 billion since 2000 (in current prices). [ICTs exhibit rapid technological development and consequent price changes that are unlike consumer prices. The complexity of available ICT price deflators and differences between them and CPI deflators render attempts to adjust prices extremely difficult. As a result, it is standard practice to present ICT trade data in current prices (i.e. unadjusted for price changes over time).] ...

ICT Services Trade

Australia’s ICT services exports (including payments of royalties and licence fees) were worth $2.3 billion in 2009, and accounted for around 4% of total services exports. Computer and information services exports have grown by 7.5% per annum over the decade – a notable highlight in Australia’s overall ICT trade performance ...

Australia’s ICT services imports cost $4.4 billion in 2009, and accounted for around 8% of Australia’s total services imports.

Computer and information services accounted for 36%, audiovisual accounted for 26%, telecommunication services accounted for 13%, and royalties and licence fees (mainly for software) accounted for around 25%.

There was a deficit on trade in ICT services of more than $2 billion during 2009, but computer and information services stand out, having traded in surplus since 2001 and being the only category of ICT goods or services to be in surplus ...

ICT Equipment Trade

While there are significant areas of export strength, Australia continues to source much of its ICT equipment from overseas, and increasingly from Asia.

In 2009, ICT equipment exports from Australia were worth almost $2.3 billion – 1.1% of Australia’s total goods exports. By comparison, Australia’s gold exports accounted for around 8% of total goods exports and coal for 20%.

During 2009, re-exports (i.e. things brought into Australia and re-exported with little or no value added) accounted for $1.1 billion, or 52% of Australia’s ICT equipment exports. Locally produced equipment exports were worth a little less than $1.1 billion.

Locally produced exports of audiovisual equipment have increased during the past decade, but locally produced computer and communications equipment, components and other ICT-related equipment exports have declined ...

In 2000, Australia’s locally produced exports of computer equipment were worth $529 million. By 2009, they had fallen to just $355 million, and communications equipment had fallen from $470 million to $309 million (in current prices).

ICT equipment imports into Australia cost more than $22 billion during 2009 – up from $19 billion in 2000 and higher than at any other time during the decade (in current prices). ICT equipment accounted for around 11% of Australia’s total goods imports during 2009. In comparison, passenger motor vehicles and crude petroleum both accounted for around 6%.

As noted, re-exports were worth more than $1.1 billion in 2009. Hence, imports of ICT equipment for domestic consumption cost around $21 billion during 2009, up from $18 billion a decade earlier. Computer equipment accounted for 33%, audiovisual equipment for 27% and communications equipment for 23% ...

ICT Services Export Markets and Import Sources

Bilateral services trade data are limited, but among reporting countries major markets for Australia’s ICT services exports during 2009 included the United States, New Zealand, the United Kingdom, Singapore, Hong Kong, Switzerland, Ireland and China ...

Of the reporting countries, the United States was by far our largest single source for ICT services imports during 2009 at $626 million. Hong Kong was the source of $284 million, the United Kingdom $142 million, India $139 million, Switzerland $107 million, New Zealand $66 million, Singapore $56 million and China $43 million.

Offshoring and trade in off-shored services involve both computer and information services (i.e. IT services) and a range of ICT-enabled business services. In only five countries did computer and information services account for more than 10% of total services exports during 2007 – India, where they accounted for almost 40% (down from 50% in 2004), Ireland 29% (down from 39% in 2004), Israel 28%, Costa Rica 15% and Sweden 10% ...

It is apparent from these data that India, Ireland and Israel are major IT services offshoring locations. The other countries listed are also significant exporters of IT services, and prima facie have the potential to become major offshoring locations (including Australia). ...

ICT Equipment Export Markets and Import Sources

Throughout the past decade New Zealand and the United States have been the largest markets for Australia’s ICT equipment exports. In 2009, other major markets included China (incl. SARs), Singapore, the United Kingdom, Papua New Guinea, the United Arab Emirates, Malaysia, Indonesia and Germany (Figure 9). The United States, China (incl. SARs), New Zealand, Germany, Singapore and the United Kingdom were also the largest markets for domestic equipment exports. ...

A decade ago the United States and Japan were the two main sources of ICT equipment imports into Australia, but Asian countries, including China (incl. SARs), Japan, Korea, Singapore, Taiwan, Thailand and Indonesia, are now major suppliers (Figure 9). The biggest change has been in imports from China (incl. SARs), which is now the largest supplier – with ICT equipment exports to Australia in excess of $11 billion during 2009 (almost one-half of Australia’s total ICT equipment imports). ...

ICT Trade State-by-State

New South Wales and Victoria dominate ICT equipment exports and imports – with NSW being the largest exporter and importer of ICT and related equipment during 2009. In addition to Victoria, ICT equipment exports from Queensland, South Australia and Western Australia were also significant ...

NSW attracted no less than 70% of all ICT equipment imports during 2009 – although $1.1 billion worth were re-exported, with Sydney acting as a regional distribution hub (Figure 10). NSW also accounted for 51% of Australia’s State-attributed ICT services exports and 70% of ICT services imports.

During 2009, NSW exported $520 million worth of domestically produced ICT equipment, down from more than $746 million in 2000. Victoria exported $312 million worth, down from $464 million a decade earlier (in current prices). Queensland, South Australia and Western Australia each accounted for 6% to 9% of Australia’s locally produced ICT equipment exports, while the contribution of the other States and Territories to ICT trade is relatively small ...

During 2009, major markets for locally produced ICT equipment exports from NSW included New Zealand, China (incl. SARs) and the United States, while for Victorian equipment exports the major markets were the United States, Germany, China (incl. SARs) and New Zealand. Queensland’s ICT equipment exports went primarily to New Zealand, the United States, China (incl. SARs), PNG, Singapore, the United Kingdom and Indonesia; South Australia’s to the United States, Afghanistan, China (incl. SARs), New Zealand, India, the United Kingdom and Malaysia; and Western Australia’s to the United States, China (incl. SARs), New Zealand, Singapore, the United Kingdom and Canada.

The composition of the State’s ICT equipment exports also varied. NSW accounted for 63% of computer equipment exports during 2009 and Victoria 20%, but just 35% of communications equipment exports came from NSW compared to Victoria’s 40%. Victoria also accounted for more than 40% of all components exports. ...

From: Summary, 2010 Australian ICT Trade Update, by Professor John Houghton and Alison Welsh, Australian Computer Society, 18 November 2010 (Graphs omitted)

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