Economy

Australia's fiscal year runs from July 1 to June 30.

Australia entered its first recession since 1991 after the economy shrank 7 percent in the second quarter, official figures showed 02 september 2020, as the country reeled from the coronavirus pandemic. The Australian Bureau of Statistics said it was the fastest quarterly contraction on record and ends a three-decade run of economic growth that was undented even by the global financial crisis. The bureau's head of national accounts, Michael Smedes, said the pandemic and containment efforts were to blame for the "unprecedented" drop that exceeded previous records "by a wide margin". A recession is defined as two consecutive quarters of contraction. Australia's economy shrank 0.3 percent in the previous three months.

By 2013 Australia was adapting to the end of a mining boom fueled by demand from China. Difficult new economic challenges were ahead, new challenges brought about by the end of the China resources boom, new challenges that also have to be confronted. The boom had fueled so much of our nation's wealth, but that boom is over.

Australia's economy is dominated by its services sector, yet it is the agricultural and mining sectors that account for the bulk of Australia's exports. Australia's comparative advantage in the export of primary products is a reflection of the natural wealth of the Australian continent and its small domestic market; 23 million people occupy a continent the size of the contiguous United States. The relative size of the manufacturing sector has been declining for several decades, but has now steadied at around 8.5% of GDP. The global recovery is putting upward pressure on prices for Australia's commodity exports, which caused a substantial rise in the terms of trade in 2011.

Australia enjoys one of the highest standards of living in the G7. Australia's economic standing in the world is a result of a commitment to best-practice macroeconomic policy settings, including the delegation of the conduct of monetary policy to the independent Reserve Bank of Australia, and a broad acceptance of prudent fiscal policy where the government aims for fiscal balance over the economic cycle. Economic recovery is strengthening, with GDP forecast to grow by 3.25% in 2011-2012 and 2012-2013. The success of monetary and fiscal stimulus is projected to return the budget to surplus in 2012. Net debt is forecast to peak at 8.9% of GDP in 2011-2012.

The unemployment rate was 5.3% in November 2011. Labor market participation has remained at around 65%. Both the federal and state governments have recognized the need to invest heavily in water, transport, ports, telecommunications, and education infrastructure to expand Australia's supply capacity. The largest river system in Australia, the Murray-Darling, and related coastal lakes and wetlands in South Australia are threatened, although the long drought has broken, and the government has developed a plan to improve irrigation infrastructure and efficiency and buy back unused water allocations along the river.

A second significant issue is climate change. A report commissioned by Prime Minister John Howard recommended a domestic carbon emissions trading scheme and that Australia take an active role in developing a future global carbon emissions trading system. The Gillard government has passed legislation to price carbon at a rate of A$23 (about U.S. $24) per ton from July 2012, with free carbon credits provided to many companies.

Australia's market economy charted a fourteenth consecutive year of positive growth in 2004, and growth in early 2005, although somewhat cooler, remained robust. This growth was buoyed by rising demand for commodities that Australia has in abundance and that China requires for its surging economy. China and Australia, natural economic partners (China needs raw materials, and Australia needs manufactured goods), are pursuing a free-trade agreement. In January 2005, a free-trade agreement between Australia and the United States went into force. The services sector accounts for 68.4 percent of the gross domestic product (GDP); mining and agricultural services (only 7 percent of GDP combined) account for 57 percent of Australia's goods and services exports.

Manufacturing, in decline for decades, accounts for just 11 percent of GDP. Since the 1980s, Australia has replaced its import substitution economy with an export-oriented one, in the process instituting key reforms such as reducing high tariffs, floating the Australian dollar, and improving the integration of state economies into a federal system. These reforms, along with consistent positive economic indicators (including high and rising per capita income, rising productivity, low unemployment, low inflation, and consistent GDP growth), are the foundation of Australia's economic prosperity.

Australia's Gross Domestic Product (GDP) grew by 3.5 percent in 2004 to reach US$607.6 billion, with services accounting for 68.4 percent of GDP, industry 28.2 percent, and agriculture just 3.4 percent. GDP per capita was approximately US$30,000. GDP is expected to increase by 3.2 percent in 2005. In 2004 Australia's general government budget was US$221.7 billion. Revenues slightly exceeded expenditures. The budget surplus was expected to decline somewhat in 2005-6. Australia has a remarkable record of fiscal discipline, as demonstrated by the statistic that government debt corresponds to only 2.9 percent of gross domestic product (GDP), compared with an average of about 45 percent of GDP in Organisation for Economic Cooperation and Development (OECD) nations. Inflation fell to 2.3 percent in 2004, down from a four-year high of 4.5 percent in 2000.

In 2004 agriculture accounted for 3.4 percent of gross domestic product (GDP) and employed about 4 percent of the labor force. Continued dry conditions in 2004-5 are expected to reduce output in the agricultural sector. Production of wheat, one of Australia's major agricultural products, is expected to decline by 19 percent from the record 24.9 million ton harvest in 2003-4. Besides wheat, other significant agricultural products include barley, sugarcane, fruit, cattle, sheep, and poultry.

In 2002, Australia's sawnwood production totaled 4.1 million cubic meters, and roundwood removals totaled 31.4 million cubic meters (excluding bark). In 2001-2 (the most recent year for which figures are available), Australia's total catch was 233,000 tons of fish, up from 229,800 in 2000-2001.

The industrial sector's share of Australia's gross domestic product (GDP) has declined steadily since the 1970s. In 2004 the industrial sector accounted for 28.2 percent of GDP and employed about 26 percent of the labor force. In 2002 (the most recent year for which complete figures are available), major products included concrete (19.4 million cubic meters), tobacco (18.4 million tons), automotive gasoline (18 million liters), automotive diesel fuel (13 million liters), raw steel (8.3 million tons), cement (7.2 million tons), pig iron (6 million tons), and beer (1.7 million liters).

In 2004 services constituted an estimated 68.4 percent of Australia's gross domestic product (GDP) and employed about 70 percent of the labor force. Services include banking and finance, education, entertainment, information technology, legal services, and tourism. In 2002 Australia exported US$24.0 billion worth of services, including US$8.1 billion worth of tourism. The services sector benefits from a multilingual workforce.

As of the end of 2003, Australia's financial services industry accounted for 8 percent of gross domestic product (GDP) and employed 345,000 people. At the same time, banks and other financial institutions had assets of about US$1.8 trillion, more than 70 percent higher than five years earlier. Banks accounted for half of these assets; other financial institutions included registered financial corporations and managed funds. With almost 54 percent of adult Australians owning shares, Australia's equity markets have grown even more dramatically. From the end of 1993 to the end of 2003, the market capitalization of the Australian Stock Exchange (ASX) increased from US$132 billion to US$580 billion. The ASX now ranks as the second largest stock exchange in the Asia-Pacific region and the eighth largest in the world.

In 2002 Australia's international tourism receipts reached US$8.1 billion, up from US$7.6 billion in 2001. Tourism directly employs 500,000 workers in Australia and is one of the country's fastest growing industries. In 2004 nearly 250,000 tourists from China visited Australia, a one-year increase of nearly 50 percent, suggesting that growth in the tourism sector is likely to continue as new sources of visitors emerge.