Advisory and economics firm Deloitte Touche Tohmatsu Limited has seized the headlines today with its forecast of a new Asia boom for Australia.
The report, entitled Positioning for Prosperity? Catching the next wave, the third edition of the firm’s Building the Lucky Country series, reveal five super-growth industry sectors worth an extra $250 billion to the national economy holding the key to Australia’s future prosperity over the next 20 years.
“The reality is that we need new growth drivers. We need another wave – or several – to create more diversified growth. And the first place to look is markets that can be expected to grow significantly faster than the global economy as a whole over the next 10 or 20 years, or by more than about 3.4% per year,” report co-author Chris Richardson said.
“As the mining wave continues to deliver prosperity for Australia, albeit at a declining rate, our analysis shows there is vast potential to be tapped in five additional super-growth waves of agribusiness, gas, tourism, international education and wealth management.”
Agribusiness is one of the industries set to help Australia’s economic prosperity. Global population growth of 60 million per year will increase food demand, with Asia’s growing middle classes set to boost their protein intake.
Rapid growth in emerging economies has also polluted the air in the major cities underwriting demand for gas, a cleaner and greener alternative.
Tourism is set to double in size in the next 20 years, with Asia’s expanding middle classes fueling the growth.
The international education sector, already our fourth biggest export earner, is also likely to drive great growth in demand from India and China.
According to the report, 3 billion people in Asia will join the middle class by 2030. By 2050, the region will account for more than half the world’s financial assets.
“The basic story is an obvious one, Asia is changing and the initial rise is great for Australia,” said Richardson.
Global markets for gas, tourism and agribusiness are each expected to grow at rates at least 10% faster than global GDP as a whole. According to Richardson, the growth of these sectors would be helped by the retreat of the Australian dollar from its record highs.
The Australian dollar will settle 15 per cent less than its present level, at around US80¢. Apart from its plunge during the global financial crisis, that is lower than the currency has been for some years.
The combined economic power of five “super wave” industries is predicted to replace the mining sector in fuelling Queensland’s future prosperity.
While gas production is already well under way in Queensland, Mr. Richardson said the coming boom was less likely to create the two speed economy that mining produced.
“It will be a more balanced boom, everybody will get a share, from New South Wales to Victoria to Queensland,” he said.
The country has already started to see the impact on interest rates and exchange rates. According to Mr. Richardson, the drivers of the five sectors have the same basic recipe for success of all past Australian booms.
Deloitte’s Gerhard Vorster also said Australian businesses and families can now be confident that their opportunities are just as great now as they were at the start of the mining boom.
“Our future growth will be more diversified than the past decade and we will have to work harder to maintain the quality of life we have come to expect. But the opportunities are there to generate exceptional and lasting sources of future wealth for all Australians.”
“The potential payoff is huge.” he said.
Deloitte will release the final version of its series next year.