Good prospects for non-resource exports

For the first time in a decade the prospects for non-resource exports are looking better, Export Finance and Insurance Corporation (EFIC), Chief Economist and contributing EPO author, Roger Donnnelly has told CEDA’s Economic and Political Overview forum in Townsville.

Companies have only been undertaking these multi-billion dollar investments because they expect to have a big ramp up in exports when the investment is complete, he said.

"Exports are definitely going to grow," he said.

Asked what areas Townsville and northern Australia should focus on, Mr Donnelly said they should do more of the same and maintain their engagement with Asia especially Indonesia, Korea, China and India.

"Inevitably I think you're going to get a greater Asian skew to your exports," he said.

"There's going to be a resource skew and farming skew to a lot of those exports but as the dollar comes off, as the commodity cycle peaks and comes off, I think that's going to create opportunities for non-resource exporters as well.

"Those flat lines (in growth) for manufacturing and service exports for the past 10 years are hopefully going to turn up as the global economic recovery takes hold."

However, this is provisional to emerging Asia not succumbing to another crisis and China avoiding a hard landing, he said.

On the topic of offsetting the downturn in mining investment ANZ, Senior Economist, Justin Fabo said the Australian dollar is playing a big part in enabling domestic spending.

We expect the dollar to fall further this year against the USD, which is expansionary for the economy, he said.

"It redirects spending back towards Australian businesses (and) we're already seeing that," he said.

"So we're likely to get more of that over the next couple of years."

Mr Fabo said this will offset the downturn in mining investment but there is a risk there will be a gap period over the next year.

On house prices Mr Fabo said Townsville was unwinding from an almighty boom in house building approvals that then flattened for a couple of years.

"The softness we're seeing in Townsville and broader Queensland in the last couple of years, notwithstanding that mining has been quite supportive, a lot of it is just payback from quite a robust period," he said.

House prices are picking up around the country but Townsville is lagging behind because it's playing catch-up.

"They're certainly not going down but they're not showing similar trends that we're seeing in Brisbane," he said.