Australian exporters warned of SE Asian instability
Australian exporters warned of SE Asian instability
CANBERRA (AP): Political and economic instability in Southeast Asia is making the region more precarious for Australian exporters, a government agency warned on Monday.
The Export Finance and Insurance Corporation, which provides export insurance for Australian companies, said the weaker U.S. economy, signs of slowing global growth and the likelihood of falling commodity prices increased the risk of problems in Asia.
At the same time, political volatility in some countries is compounding economic risks.
"Emerging market event risk is on the rise, with the recent liquidity crisis in Turkey adding that country to a list of hotspots that already included Argentina and much of emerging Asia," said EFIC senior economist, Mark Thirlwell in a research note.
"All told, the risk of another emerging markets crisis is on the rise."
EFIC's head of credit, John Collins said banks are becoming less willing to underwrite exporters in the region.
"Increasingly we operate in partnership with banks, where the banks might not underwrite all of the risks of a transaction and we would look to take the top-up portion, whatever is necessary to keep Australia's exports moving, and yes, we have seen an increase in demand," Collins said.
EFIC said high oil prices are putting more pressure on foreign debt burdens especially for the Philippines, Korea, and Thailand.
The slide in microchip prices throughout last year, together with the slumping U.S. NASDAQ stock market, has raised fears about a downturn in the global electronics industry.
"With many Asian economies heavily dependent upon electronics exports, that would represent a substantial setback for the region's growth prospects," Thirwell's report said.
Thirlwell told The Associated Press that although recent interest rate cuts by the U.S. Federal Reserve might ease some of the economic risks, political volatility, particularly in Indonesia and the Philippines, remain the greatest risks for Australian companies.
Thirlwell and Collins emphasized that although the region was becoming more precarious, each country head to be assessed individually.
"There are so many different risks throughout Asia, the general advice we would give is know your buyer and know your market, in Asia particularly that is true," Collins said.
Due to a combination of both political and economic problems, Indonesia and the Philippines remained the major risks for Australian exporters, they said.