With Australia’s 2020 recession confirmed through the release of the June quarter GDP numbers by the Australian Bureau of Statistics (ABS) last week, it is highly topical to look at the impact of the global COVID-19 situation on German-Australian businesses. With a fall of 7.0 per cent in the last quarter, Australia’s GDP experienced the highest fall on record. It was, however, still well below the fall in many other advanced economies.
With over 27 million confirmed COVID-19 cases globally, questions arise about the impact of COVID-19 on globalisation and bilateral trade and investments.
The German-Australian Chamber is part of the global German Chambers of Commerce Abroad (AHK) network active in 92 countries and with the Association of German Chambers of Industry and Commerce (DIHK) as our head organisation. The AHKs receive partial funding from the German Federal Ministry of Economics and Energy (BMWi). Based on input from all German Chambers Abroad, the DIHK has produced the Impulse Paper on the Globalisation after Corona.
Australia and Germany have both greatly benefitted from open trade and investments. Australia currently has Free Trade Agreements (FTA) with most of its major trading partners and is in negotiations with the European Union and the United Kingdom.
But as the Impulse Paper points out, global trade openness, i.e. the ratio of global exports to world GDP, has been shrinking since 2008.
COVID-19 has a significant further impact on globalisation. The Impulse Paper rightly points out that protectionism will not help with the necessary economic recovery. Restrictions on investments need to be carefully calibrated not to discourage beneficial investments.
Diversification of supply chains will ensure reliability and cost competitiveness. That is why the German-Australian Chamber is strongly supporting the conclusion of the Australia-EU FTA negotiations. We are calling on the Australian Government and the European Union to prioritise this agreement to achieve diversification opportunities between like-minded countries.
As the Impulse Paper also points out, global trade and investment rely on cross-border movement of goods and people for work purposes. Especially the cross-border exchanges of people for trade and investment is currently heavily restricted in Australia. In turn, the restrictions hurt the German-Australian business community. Replacing current strict border bans by a risk-based approach could help reduce the negative impact. In some specific cases, the government will grant an exemption from the border ban if the applicant provides sufficient documentation for the urgent need to travel. Please contact me if the border closures impact your German-Australian business.
The impact of COVID-19 on economies is very significant, but it also provides an opportunity for better trade and investment relations in future, particularly between Australia and Germany.
