The Australian Economy
The Australian economy enjoys a robust, healthy reputation powered by the resources industry with large contributions from both the mining sector and the oil and gas sector. Australia weathered the Global Financial Crisis (GFC) remarkably well and never entered recession. It was saved from recession by a strong resources sector led by China’s demand for our minerals and gas.
Australia has a modern market economy with a GDP of about US$1.2 trillion – making it the 13th largest national economy. We’re also in the top 20 importers and exporters globally.
The way we talk about mining and resources, you’d think that’s all we do, but actually primary industries (including agriculture) make up just 10 per cent of our GDP. They do make up 57 per cent of our exports though. By and large, we’re a service or tertiary economy. It accounts for 68 per cent of our GDP.
Australia has its own stock market, the ASX, and it’s own currency, the Australian dollar.The nation’s central bank is the Reserve Bank of Australia, which conducts monetary policy and is charged with maintaining a strong fiscal system. The RBA sets interest rates although the banks are not bound by the RBA’s decisions and can increase or decrease the rates they offer.
One of the major ongoing Australian economic policies is open trade. The Howard government negotiated many free trade agreements, including one with the USA and one with the ASEAN countries.
The Australian economy benefits from a great deal of foreign investment although the amount of foreign investment is strictly controlled within markets. Foreign companies are mainly attracted to our diverse natural resources including coal, iron ore, natural gas, copper and uranium. While iron ore has been a major export for some 50 years, the latest industry to excel is the export or natural gas. Major multi-billion dollar projects, like Chevron’s Gorgon Gas Project, are underway to the north of Western Australia.
The Global Financial Crisis
The GFC continues to define the politics and fiscal situations of countries across the planet, but Australia has weathered the storm better than most. Before the crisis hit, Australia had experienced economic growth for 17 years, consecutively.
As the crisis took hold and the depth of the global woes became apparent, the Rudd Labor Government injected a stimulus package worth some US$50 billion into the local economy – this was done through construction programmes, direct cash hand-outs to taxpayers (with an instruction to spend it) and other methods.
The flow of cash into the economy - coupled with the Reserve Bank cutting interest rates - helped ensure Australia experienced just one quarter of negative growth. The Australian economy grew by 1.2 per cent in 2009 and 3.3 per cent in 2010 – making it one of the best performers in the OECD. This was also helped by continued demand for Australia’s primary resources from China.
You can find more information about Australian Government and Politics or visit our Life in Australia section for more articles about living in Australia.