Australia – Economy Overview

• Capital: Canberra
• Area: 7,741,220 km²
• Population: 21,350,000
• GDP (PPP): US$718.4 billion
• GDP (Nominal): US$1046.8 billion
• Currency: Australian Dollar (AUD)
• Time Zone: GMT+8 to +10.5

The Australian economy is now in its 16th year of continuous economic expansion thanks to the Australians' commitment to best-practice macroeconomic policy settings. The commitment has yielded the Australians a higher standard of living than any G7 country apart from the United States. Australia also has a significant advantage in that its vast expanses of land are home to a mere 21 million people, which means that the natural wealth of the Australian continent has to provide for a very small domestic market, and the rest can be exported.

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Since the 1980s, Australia has implemented major economic reforms that included significantly reducing protective barriers to free trade, privatizing government owned monopolies, floating the Australian dollar, and large reductions in income tax rates. Today the Australian Government has zero debt and is expected to grow at around 3.5% in 2008. The country's emphasis on reforms is often seen as the main factor responsible for its economy's unwavering strength, though its performance has recently become heavily dependent on US and Chinese economic growth.

There are major two issues currently preoccupying Australia's economic policy makers, which are climate change and national infrastructure, focused mainly on a 5 year long drought and high carbon emissions in city areas.

In addition, the 2007- 2008 financial year saw Australia's deficit go up 4% most likely due to a real estate bubble, together with the absence of export manufacturing, and high levels of foreign debt in the private sector.

Trade

Since the middle of the twentieth century, Australia shifted its trade away from Europe and North America to the East Asian markets. January 1, 2005 saw the induction of the Australia-U.S. Free Trade Agreement (AUSFTA) marking the first free trade agreement the U.S. has entered into with a developed economy since the U.S.-Canada agreement of 1988. Australia has also signed similar agreements with Thailand and Singapore and is currently negotiating FTAs with China and Japan.

Service

The Australian service sector is responsible for 80% of the country’s GDP. The sector includes a booming financial industry with the largest international debt securities market in the Asia–Pacific, a strong tourism industry that welcomes over five million visitors each year, as well as other personal and business services. This at least partially due to the advantages of a competent, multilingual workforce, Australia's stable political system, and close proximity to Asia's financial markets.

Agriculture

Agriculture is a major industry in Australia, employing approximately 402,000 people and accounting for around 3% of Australia’s GDP. Its fertile soil produces a wide range of crops and livestock, with 80% of all production going toward exports. Australia is a strong supporter of the fair trade in agriculture cause. As a result, Australia doles out very little support or subsidies to local agricultural, with the exception of relief funds that are provided in emergency circumstances such as droughts. The Australian administration is now preoccupied with the decision of whether to grow genetically modified foods.

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