The weakening global economy is having a severe affect on Australian exporters, with export prices declining by six percent in the March quarter hurting both national income and economic growth.
The decline is the fastest since June 2003, with terms of trade (the ratio between export and import prices) falling by nearly two percent in the March quarter.
The decline signals trouble for Australian exporters, with RBC Capital Market senior economist Su-Lin Ong believing it will have negative implications for spending, investment and employment.
The government have forecast a 12.75 per cent decline in the terms of trade in 2009-10 in its Updated Economic and Fiscal Outlook released in February, after an estimated 9.0 per cent increase in 2008-09.
Treasurer Wayne Swan has warned that both revenue and economic growth would be “significantly worse” than previously forecast, with the global recession hitting the resources sector and the economies of Australia’s major trading partners.