Australia pinched by Asia crisis<\/p>\n
By Sid Astbury<\/p>\n
SYDNEY (DPA): Malaysia's prickly Prime Minister, Dr Mahathir
\nMohamad, famously said of Australians that they were uncertain
\nwhere their loyalties lay:<\/p>\n
\"When Europe was top dog they wanted to be Europeans; when the
\nUnited States became the superpower they wanted to be seen as
\nAmericans; when Asia became the focus of economic activity they
\nwanted to be part of Asia.\"<\/p>\n
But with Asia in economic turmoil, Australians are unhappy
\nwith the proof of membership of their latest club: a plunging
\ncurrency, a sagging stock market, growth forecasts that are
\npruned regularly and politicians who assure them all will be
\nright in the end.<\/p>\n
After a decade and more of seeking closer engagement with the
\nregion, Australian leaders now protest that their economy is
\nbeing unfairly bundled with Asia's wobblies. Treasurer Peter
\nCostello, has this to say about Asia's downturn: \"It will have an
\neffect on exports, but it's not a major part of the Australian
\neconomy\".<\/p>\n
People outside the region, beg to differ. They see the scale
\nof Australia's economic enmeshment with the region and warn that
\nthe Lucky Country can't help but be sucked into the maelstrom.
\nMore than 60 percent of Australia's tourists are from Asia, 60
\npercent of its exports go there and lots of Australian jobs
\ndepend on continuing Asian investment.<\/p>\n
Speaking in New York recently to a group of Australian company
\nexecutives, Massachusetts Financial Services vice president
\nLeslie Nanberg told it like it is: \"You always wanted to be seen
\nas Asian. Now you are\".<\/p>\n
Every day figures come out that show Australia will be deeply
\nhurt by Asia's travails.<\/p>\n
The National Farmers Federation warned last week that beef and
\nwheat exports to Asia are threatened because of successive
\ncurrency crises that have lifted the cost of Australia produce on
\nsome Asian supermarket shelves by upwards of a third. This week
\nanalysts were warning that thermal coal producers might face
\nsavage price cuts for next year's export contracts with up to
\nhalf of Australia's steaming coal mines facing closure in the
\nnext five years.<\/p>\n
It's not the troubles in Southeast Asia that will hurt the
\nmost, as those markets take just 10 percent of exports. The
\nmeltdown in Japan and Korea, Australia's two largest export
\nmarkets, will hit the hardest. John Sutton, an executive of
\nCommonwealth Bank, puts it this way: \"We are caught in this story
\nin Asia. The won is down, the Nikkei is down, and a lot of our
\nexports are going up there.\"<\/p>\n
Just a month ago the government was claiming that the Asian
\ncrisis would shave less than half a percentage point off next
\nyear's projected growth rate of 4.25 percent. Now, with the
\nAussie dollar and the stock exchange in retreat, the sums are
\nbeing done again and the outlook is getting much bleaker.<\/p>\n
Westpac Banking Corp's Bill Evans, one of the country's most
\nrespected economists, has downgraded his guess at 1998 growth
\nfrom 4 percent to 3 percent. Evans, and other top analysts, don't
\nbother to deny that Asia's problems are fast flowing on to
\nAustralia and that international fund managers are right to group
\nAustralia and New Zealand with the economies to their north.<\/p>\n
If there is a bright side to all this, it's that Australia is
\nat last being tarred with the same brush as Asia and not being
\ntreated as a western economic enclave. Engagement is a reality.<\/p>",
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