The first challenge for the new government would be to maintain the growth of their mining industry. This would help increase their employment rate and benefit consumption. Previously, the satisfactory employment rate in this industry has helped reduce overall unemployment rate in Australia continuously. However, reduced growth rates in the Chinese and Indian economies will need a close watch because that has dampened export demand for Australian iron and coal somewhat.
The second challenge for the new government would be that they will need to control inflation, which has accelerated with economic growth, led by a healthy mining industry. During 2H09-1Q10, Headline Inflation in Australia accelerated, so inflation approached the upper limit set by the authorities. As a result, it is possible that the Australian government may increase their key policy rate again in the near future. This could then affect consumer confidence and domestic consumption, as seen in the latest increases in their policy rate during October 2009 to May 2010.
The Inflation rate in Australia will be an economic challenge for the new government because they will have to make an effort to forestall further increases. Meanwhile, they will likely seek to sustain mining industry growth, and will have to ponder over the impact of inflation control measures on domestic consumption.
Another challenge for the new government would be to find a solution for the contraction in service business seen previously, particularly during May to July. That contraction was seen in all their service sectors, such as wholesale, retail, restaurant and transportation businesses.
Thai exports to Australia in 2H10 will likely grow continuously over the 41.53-percent growth YoY in 1H10, although there are some risk factors to be aware of due to increases in the Australian key policy rate to limit inflation. This may pressure consumption there. In addition, another factor that may affect Thai exports to Australia may be a decelerating Australian economy, largely due to faltering mineral resource exports affected by measures to reduce overheating in the Chinese and Indian economies.
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