Over the last two decades, Australia’s economy has experienced positive reforms that have boosted its economy, and raised its standard of living. Australia is today riding the commodity boom and should continue to grow for at least the next five years.
Australia is currently the world’s 14th largest economy by nominal GDP, with a size of $889 billion in 2007. Following a recession in the 1980s Australia had enjoyed 16 years of uninterrupted growth, aided by growing demand for commodities and robust government policies. GDP long term growth has averaged 4.4%, with 3.3% average between 2003 and 2007, but is expected to drop to the 2% - 3% range over the next five years.
Australia is a western-style market economy. The services sector is the largest, accounting for 72% of GDP in 2007. Australia is benefiting from the current surging demand for commodities. It is a major exporter of natural gas, coal, iron, bauxite, copper, tin, gold, silver, uranium, tungsten, mineral sands, lead, zinc, opals, diamonds, grain, wool, meat and food products. Although the agricultural and mining sectors are small, 4.7% of GDP combined, they contribute approximately 65% of exports.
According to the CIA World Factbook, in 2007 Australia imported AU $228 billion of goods and services and exported AU $216 billion. The main export partners are Japan, China, South Korea, US and India, and the main import partners are US, China, Japan, Singapore, and Germany.
Inflation is currently rising as it is in most of the world. It stood at 4.2% at the end of last year and is likely to continue to be above the 2% - 3% target set by the Bank of Australia. The country has a favorable trade balance, but has a current account deficit of 5.8% that is expected to continue until 2012 according to the International Monetary Fund. This reflects large interest payments against foreign debt.
While traditionally tied to Europe and US, Australia is now dependent on Asia for its economic well-being. In particular it partners with Japan for capital financing, particularly in the mining industry, and with China as its primary export partner.
The economy has also been supported by a housing market boom and a strong national currency.
In contrast, the manufacturing sector of the country has experienced instability in recent times, but recovered in 2007 and contributed nearly 10% to the GDP of the country.
The economic reforms carried out by the Australian government have played a significant role in the development of the Australia economy. Previously Australia was regulated and protected by tight rules charters, but by reducing high tariffs, opening the financial services sector, making the labor markets more flexible, reforming the tax system and privatizing government companies the conditions for the current boom have been created.
Australian economy key data :
| GDP (real growth rate) |
4% |
GDP (per capita) |
US$37,500 |
| GDP (purchasing power parity) |
US$766.8 billion |
Rate of inflation |
Nearly 3% |
| Exports |
US$139.4 billion |
Imports |
US$152.7 billion |
|