If they won’t take iron ore, give them an education and a vacation.
That is the nimble Australian economy in a nutshell. The country whose reliance on Chinese demand to fuel growth has quickly adjusted to new realities.
Australia reported surprisingly strong fourth-quarter gross domestic product Wednesday, rising 3% from a year earlier. That’s despite a colossal collapse in the prices of the country’s key exports.
Or what used to be its key exports. The last two months of 2015 were the first time in nearly six years that Australia’s services exports—which include inbound tourism and education—outstripped exports of metal ores and minerals in value terms.
And it isn’t just because the price of iron ore has fallen. Services exports have grown strongly, the main ingredient being a weak Australian dollar.
Chinese parents surely notice that a seat at the University of Melbourne is suddenly a bargain compared with the U.S. alternative. Data out Monday from the Australian government showed foreign enrollment at the country’s educational institutions hit 645,000 in 2015, up 25% from 2012, when the Australian dollar was near its peak strength.
Tourism is also booming. Chinese visitors were up 20% last year, exceeding one million for the first time.
This should mean a tailwind for Australian services companies, especially if the Australian dollar remains competitive. Scentre Group, spun off from Westfield in 2014, is Australia’s major shopping mall owner and would do well to cater to Chinese shoppers. Navitas provides educational services, with its English-language segment among its strongest performers last quarter. Mantra Group is a hotel operator.
For a country that was dismissed as a mining one-hit wonder, Australia has changed the tune.
