Economic of Australia

Today, Australia’s economy has truly reflected this “condition”. Prior to the 1970s much of Australia’s trade was held with the European and North American markets. During this period, Australia was also considered as a relatively closed and protectionist economy. However, as key economic reforms were gradually being introduced by the Australian government, the Australian economy also started to turn their attention away from trade with the Western markets to trade within the Asia Pacific region.

This shift has turned Australia into one of the fastest growing advanced economies in the world.Australia is the 13th largest economy in the world according to nominal GDP (current prices) and the 17th largest according to GDP (PPP). In 2010, Australia’s GDP (PPP) was US$882.344 billion – a 3.94 percent increase from 2009. Australia’s nominal GDP (current prices, US dollars) growth during the same period was even more amazing – GDP (current prices, US dollars) grew from US$994.25 billion in 2009 to US$1.219 trillion, a 22.68 percent increase.

In the past two decades, Australia has enjoyed a period of uninterrupted economic growth – an average of 3.3 percent in real GDP growth annually. Australia possesses a well-diversified economy boosted by the strength of its services and resources industries.

Australia’s Economic Structure

This been obtained through a stable and modern institutional and regulatory structure. Australia was ranked third in the 2011 Economic Freedom Index behind Hong Kong and Singapore and continues to provide an ideal environment for business and environment.

Domestically, Australia’s economy can also be characterised by an east/west divide. The eastern part of Australia is home to the majority of Australia’s service and financial industries. It also contains Australia’s capital city Canberra, the heart of Australia’s political and economic policies. Western Australia, on the other hand, controls the majority of Australia’s natural resources, including iron ore, gold, oil and natural gas.

The contrast between these two regions has often led to disagreements within the Australian government over developmental plans. Although Australia’s GDP is still dominated by its service and financial industries, these industries have been struggling in recent years. On the other hand, Australia’s resources and commodities industries are currently experiencing a boom period. According to Canberra-based Access Economics, growth in regions endowed with minerals and oil and gas will far outstrip growth in the country’s more populous states next year. However, concerns have also been raised on whether the resource and commodities industries are too reliant on exports to China.

Australia’s Export, Import & Trade

In 2009, China became Australia's largest export market, surpassing Japan.

Resources continue to underpin Australia’s exports to China. Australia exported 266.2 million tonnes of iron ore to China in 2009, an increase of 45.2 per cent over the same period.

China is also Australia’s largest source of imports. Major imports from China include clothing, communications equipment, computers, prams, toys, games and sporting goods, furniture and televisions.

The vast scale of trade with China has seen massive investments by Chinese companies in Australia. From 2007 to 2010, Chinese investment in Australia amounted to nearly US$60 billion. Australia’s mineral exports also grew by 55 percent to US$139 billion in 2010 and are projected to reach US$180 billion in 2011, thanks to China’s strong economic performance. Chinese companies have also started to lease land from the Australian government to mine resources on their own.

Along with their relationship with China, Australia holds multiple free trade agreements with numerous other countries such as the US, Singapore, Chile and Thailand. Australia is also a member of numerous organisations such as APEC, the G20, WTO and OECD.

However, Australia’s most notable trade partner is New Zealand. The Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) was enforced in 1983, building upon the 1965 New Zealand Australia Free Trade Agreement (NAFTA, not to be mistaken for the North American Free Trade Agreement). The ANZCERTA has greatly integrated both economies and there are now plans to create a single Australasian economic market by 2015.