This article explores the modest impact of the Asian Crisis on Australia’s primary commodity exports. Simulations using a global general equilibrium model show: (i) as capital flees Asia, investment in Australia increases and the trade deficit grows; (ii) while terms of trade deteriorate in the short run, they improve in the medium run as import demand increases in the crisis countries; (iii) exports of primary commodities expand as the crisis countries try to export more; (iv) more income‐elastic primary commodities fare less well than the income‐inelastic foodstuffs as incomes decline in the crisis countries; (v) Australia’s relatively low dependence on manufactured exports was a buffer as manufactured exports came under heavy pressure from exports from the crisis countries.


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