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  • Economy

Australia - Economy

KEY FACTS 2006

  • GNI: US$755.8bn
  • GNI pc: US$35,960
  • GDP growth: 3.4% p.a. 2003–07
  • Inflation: 2.8% p.a. 2003–07
  • Aid: net donor

Overview: Australia has a high degree of prosperity, based on its wealth of natural resources, policies of redistribution and welfare, and stable democratic society. The principal minerals are aluminium, coal, gold, iron and oil. The economy relied mainly on agriculture and mining until manufacturing boomed after the Second World War. Service industries have since led growth, rising from about 60% of GDP in the 1960s to about 70% in the 2000s.

Despite its steady performance in the 1990s, the economy remains vulnerable to variations in agricultural output and fluctuations in world commodity prices. There is a high level of foreign investment resulting in a serious current account deficit as interest and dividends leave the country; domestic investment is relatively low.

From the 1980s major economic reforms were introduced, including liberalisation of trade and foreign investment, deregulation of financial system and markets, privatisation of public enterprises and government services, and decentralisation of wage settlements.

Government policy is aimed at increasing exports of manufactured goods, in the face of strong international competition. Successive governments have introduced various initiatives to encourage personal saving but none has proved politically sustainable.

During the 2000s the economy grew steadily, by 2.7% in 2005, 2.8% in 2006 and peaking at 4.5% in 2007, benefiting from strong world commodity prices. There were fiscal surpluses for most of 1998–2008 and net public debt was eliminated in 2006. Unemployment reached its lowest level since the 1970s, in early 2008 at 4.1%.

Trade: Exports of goods and services account for around 18% of GDP and manufactured exports for 25% of total merchandise exports (2004). Principal exports are minerals, metals, metal ores, coal, coke, oil, machinery, transport equipment, gold, cereals, wool and meat; the main imports are machinery, consumer goods, transport equipment, fuels, lubricants and chemicals. Main export partners are Japan, the USA, Korea, China, New Zealand and the UK. Most imports come from the USA, Japan, China, Germany, UK and New Zealand.