Economy of Australia

Australia has had one of the most outstanding economies of the world in recent years. As a high-growth, low-inflation, low interest rate economy, it is more vibrant than ever before. There is an efficient government sector, a flexible labour market and a very competitive business sector.

With its abundant physical resources, Australia has enjoyed a high standard of living since the nineteenth century. It has made a comparatively large investment in social infrastructure, including education, training, health and transport.

The Australian workforce has seen many improvements over the last decade, leading to the surge in productivity in the 1990s. The complex and centralised award based industrial relations system has given way to a more decentralised one with many employees working under workplace agreements tailored to meet enterprise needs.

Australia has a prosperous Western-style mixed economy, with a per capita GDP on par with the four dominant Western European economies, and ranked third on the 2004 Human Development Index and sixth on The Economist world-wide quality-of-life index 2005. In recent years, the Australian economy has been resilient in the face of global economic downturn, with steady growth. Rising output in the domestic economy has been offsetting the global slump, and business and consumer confidence remains robust. Australia’s emphasis on reform is another key factor behind the economy’s strength. In the 1980s, the Labor Party, led by Prime Minister Bob Hawke and Treasurer Paul Keating, commenced the modernisation of the Australian economy by floating the Australian dollar in 1983, leading to full financial deregulation. Since 1996 the Howard government has implemented microeconomic reform policies on the labour market, and has privatised monopolies including the telecommunications industry.

Since the recession of the early 1990s, the Australian economy has not suffered a recession in over 13 years. In April 2005, unemployment had fallen to a level of 5.1 per cent, the lowest level since the late 1970s. The agriculture and natural resources sectors contribute 3 and 5 per cent of GDP and make up the bulk of Australia’s exports. Australia’s largest export markets include Japan, China, the United States, South Korea and New Zealand. The service sector of the economy including tourism, education, financial services makes up 69 per cent of GDP. One area of concern to some economists is a perpetually high current account deficit and associated high net foreign debt, usually attributed to a high level of household borrowing.