Frost & Sullivan: Rising water shortages spark demand for water recycling, desalination in Australia

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SINGAPORE, June 15, 2009 -- As the global economy goes through the worst financial crisis since the Great Depression, countries in Asia Pacific have not been spared and experienced a slowdown in economic growth, although Australia's GDP in first quarter of 2009 managed to grow by 0.4% over its last quarter GDP.

According to Frost & Sullivan Asia Pacific Consultant of Environmental & Building Technologies Practice Ranajay Dasgupta, the challenging economic environment affected the overall performance of the environmental industry, though certain sectors were more adversely impacted than the others. The period saw a decline in industrial production and less waste generation.

"Water treatment equipment manufacturers witnessed a slowdown and the fall in revenues in the environmental sector in Australia followed expectations of poor performance of the industrial sector in developed nations," he said.

"Although regulatory and environment policies are well developed in Australia, in reacting to the harsh economic climate and pressure from industry, the Australian Government has postponed the Carbon Pollution Reduction Scheme (CPRS) until 2011," he continued.

The postponement means major polluters will continue to enjoy the concession of carbon emission, adversely impacting the prospect of pollution control equipment manufacturers in Australia for the next 2 years.

Still, Australia's waste and wastewater industry is expected to grow annually between 3 and 3.5%.

In terms of industry specifics, Dasgupta said that developed countries are unlikely to see major construction of new facilities. "However, for contractors, there is a potential market for retrofit contracts as the sewerage system in major cities is old and overloaded."

He also identified water recycling and desalination as key growth areas for this industry. Rising water shortages and cost reduction achieved through technical innovations are spurring the growth of the desalination industry. "Shortage and uncertainty of water supply are increasing the demand for water recycling, especially in countries like Australia," he said.

He added that the range of skills and technologies in demand tend to be similar to those supplied in other developed region/countries such as Europe and the US. This indicates that opportunities exist for suppliers which are able to provide innovative technologies and services which can compete with strong local and overseas competitors.

"The business environment will remain challenging in Australia as domestic sales remain sluggish throughout the year. The industry will see more opportunities in retrofit contracts and renovation of existing facilities. Thus, focus will be on cost reduction, and overseas expansion in developing markets," said Dasgupta.

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership.

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