How has the Australian economy been affected by the COVID-19 outbreak?
The impact of COVID-19 outbreak has thrown Australia’s economy into a downturn after 29 years of continuous growth. The Reserve Bank of Australia (RBA) has decreased interest rates to 0.25%. RBA has also revised its GDP forecast from expanding by 2.75% to contracting by 3.75%. To support the economic recovery, the Australian government has rapidly introduced a number of fiscal and monetary policies to stimulate and boost domestic economy by already funding approximately US$ 227 billion.
However, Australia’s credibility has been ranked by Moody’s Investors Service at AAA (only 10 countries achieved this rating) due to its economic strength and transparent administration of the government as well as the efficiency of public health management related to the pandemic. In addition, the IMF has estimated that Australia is a country with great flexibility in terms of economic recovery. The GDP growth rate is expected to decrease by only 4.5% compared with the previous forecast of 6.7%. Therefore, this forecast shows that Australia is still a country with economic potential and able to restore and return to grow in 2021.
How has COVID-19 affected Australian consumer behaviour?
Although the COVID-19 pandemic has affected the business and consumption of Australia as a whole, this pandemic has enabled businesses and consumers to be more adaptive to the online world. Online trading channels are playing an increasingly important role. Major Australian distributors have improved their online services to meet growing consumer demand. During COVID-19, online trade has accounted for 10% of total retail business and is expected to increase to 20% in the next 12 to 18 months. The COVID-19 outbreak has accelerated Digital Adoption in Australia. Without this situation, the growth of online trade might have taken up to 10 years. Now the shopping model is likely changed to “Contactless Shopping” or “Click and Collect”.
With the adaptation of social distancing and telework practice, people are paying more attention to their health, which is behind the growth of health products, especially those made from natural raw materials and organic products, such as food, beverages, cleaning products, cosmetics and plant-based products. Based on the recent survey, 12% of Australians (approximately 2.5 million people) prefer to have plant-based food. By having spent more time working from home, Australians are also becoming more concerned about the hygiene and healthiness of their pets, and Australians have as many as 28 million pets. They will choose pet products made from natural ingredients that are healthier and more environmentally friendly.
Due to the restrictions and lockdown measures in Australia, people are more likely to spend their days in their homes than in the workplace. During the lockdown, there was a rising demand in home decoration items, DIY furniture, kitchenware, electrical appliances, gardening equipment and exercise equipment.
What kinds of Thai products are likely to succeed in the Australian market?
Food products are still rising in demand, especially rice and rice-related products. Thailand has long been a top rice exporter to Australia. Although Australia does grow some rice, it is still not an important crop compared with the 300,000 tonnes consumed each year, meaning there is steady import demand. Also, ready-to-eat and ready-to-cook food tend to be more attractive to Australians due to the hustle and bustle of modern life. This type of food will remain popular. The market share of ready-to-eat in 2019 was US$ 818 million and it is forecast that the market will grow to US$ 1.13 billion in 2024, an increase of 38.63%.
What is the trade value between Thailand and Australia, and what are future expectations?
In the first six months of 2020, total trade value between Thailand and Australia was US$5.2 billion. Of the total trade value, Thai exports value to Australia amounted to US$3.7 billion (a decrease of 8.26% YOY). Australia’s economic slowdown, especially during the pandemic period, play a big part in the decline in export value of Thailand over the period. Consumer spending behaviours have changed markedly and are less inclined to spend money on non-essential goods. This is not only affecting Thailand but also other major trade partners of Australia such as China, US, Japan and Germany. Additionally, the slowdown in new vehicle sales for 28 consecutive months in Australia affect the overall value of export because the vehicle, automotive components and accessories comprise over 50% of total export value of Thailand to Australia.
In contrary to the bearish automotive market, Thai products that are expanding are rubber products (rubber gloves and medical appliances), canned seafood, cosmetics, soap, skincare products, rice and pet food.
How does the Thai Trade Centre, Sydney promote Thai products in Australia?
Australia is not a new trading partner of Thailand. Australia’s trade and economic relationship with Thailand has grown stronger since the Thailand-Australia Free Trade Agreement (TAFTA) came into effect in 2005. The countries trade partnership has been fostered a closer relationship since, based on the statistic Thai businesses used 92% of TAFTA entitlement. Moreover, Australia confidence in the quality of Thai goods and production standards.
Due to the travel-restriction barring any face-to-face trade negotiation and promotion in combination with the digital adoption, trade and promotion activities in Australia have been moved toward digital platforms. Instead of promoting Thai products in fairs and conventions, which are currently on restriction, the advertisement and listing of Thai products in the e-Directory have been implemented. The Thai Trade Centre, Sydney Office has partnered with the organiser of Naturally Good Expo, an expo focusing on the healthy, organic and natural products, in promoting rice and rice-related products in their e-Directory. The initiative has been made under the “Think RICE: Think THAILAND” campaign. The aim is to promote rice and rice-related targeting importers and health-conscious consumers.
Thai SELECT campaign is another good example of the activities that the Thai Trade Centre, Sydney Office have been promoting. Thai SELECT restaurants are considered to be important channels in distributing and promoting Thai cuisine, beverages and ingredients directly to Australian consumer. The promotional activities have been carried out through various online platforms such as Zomato, a restaurant search engine and online review platform in Australia, and Asian Inspiration, a specialist online platform of authentic Asian foods in Australian market by providing Thai food articles and cooking demonstration videos by Thai SELECT’s chef.
Lastly, the health-conscious Australian consumers continue to grow every year. The Thai Trade Centre, Sydney office has launched the new campaign, Riceberry x Thai SELECT, to promote Thailand’s coloured rice in Australia market through Thai SELECT restaurant. This is in order to continue delivering a consistently good value and quality to consumers in line with the mindful consumption behaviour.
Words by Natthinee Ratanaprasidhi