Experts are predicting a major impact on Australian farmers if Australia fails to resolve tensions with China over trade and the coronavirus inquiry.
Finance expert Peter Switzer has told Today it is likely to be a difficult year for Aussie farmers if Australia is forced to find another country to export domestic products.
“There will be a time lag when you lose a contract, you’ve got to find a contract and you’ll probably get a lower price because the demand won’t be as strong as the Chinese demand. Having billions of people there is a big demand for beer and brewing.
“For some farmers in particular it will be a really tough 12 months unless something can be done at a strategic and political level to get the Chinese to back off,” he said.
Other industries including iron ore and agriculture could also take a hit which could put Australia’s budget in an even worse position following huge government spending amid the COVID-19 pandemic.
“One we are most scared about would be iron ore. We send $63 billion worth of iron ore to China. If that happened it’s a big employer, a great supplier of tax revenue to the Government, so when the iron ore price goes up the budget is in a much better position, so they are going to be in trouble,” Mr Switzer said.
While government subsidies and welfare payments have assisted Australia’s economy to stay afloat amid the crisis, exports are a major driver of the economy and without them, long term fiscal damage is likely.
“It’s going to be really difficult. They are the biggest game in town for us and given the fact that the coronavirus has slowed the economy down we want to see a fast rebound of the economy,” Mr Switzer said.
“China is really just timing this perfectly to put pressure on us.”