Lexi Webster
Australia has a highly developed and stable mixed economy, with a heavy focus on the service sector. In 2017, the service sector comprised 62.7% of the GDP and employed 78.8% of the labour force. The country's economic growth is measured in nominal or real terms, with the latter being the preferred measure as it indicates how much the country is producing at a given time. Australia has plentiful natural resources, including the second-largest accessible reserves of iron ore in the world, and is a major exporter of agricultural products, minerals, and energy. The country's economy is also heavily influenced by global demand for its goods and services, with increases in demand leading to higher prices for exports.
| Characteristics | Values |
|---|---|
| Type of Economy | Mixed economy |
| Ranking in 2023 | 14th-largest national economy by nominal GDP |
| Ranking in June 2021 | 21st-largest goods exporter, 24th-largest goods importer |
| Longest run of uninterrupted GDP growth | 103rd quarter and 26th year as of March 2017 |
| GDP in June 2021 | $1.98 trillion |
| Sector with the highest contribution to GDP | Service sector (62.7%) |
| Sector with the highest labour force | Service sector (78.8%) |
| Percentage of GDP contributed by the mining industry at its peak | 9% |
| Creative industries' contribution to the economy in 2016 | $122.8 billion (7.4%) |
| Balance on goods and services in 2023-24 | Surplus of $54.8 billion |
| Total goods and services exports in 2023-24 | $659.4 billion |
| Total goods and services imports in 2023-24 | $604.6 billion |
| Percentage of business importers that traded with China | 56% |
| Federal government revenue sources | Personal income taxes and business taxes |
| Other taxes | Goods and services tax, excise, and customs duties |
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What You'll Learn
Australia's natural resources and exports
Australia has a highly developed and mixed economy, with the service sector being the major economic driver. In 2017, the service sector comprised 62.7% of the GDP and employed about 75% of the nation's labour force. The service sector includes finance, trade, transport services, tourism, education, and financial services.
Australia has abundant natural resources and is a major exporter of agricultural products, energy sources, and minerals. The country's natural resources include minerals, petroleum, natural gas, and timber. Australia has the second-largest accessible reserves of iron ore in the world, the fifth-largest reserves of coal, and significant gas resources. In 2019, Australia surpassed Qatar as the world's largest exporter of natural gas. Coal is mined in every state of Australia except South Australia, and the country is one of the world's major coal producers and exporters. Australia was the world's largest producer of iron ore and bauxite in 2019, and it is also a major producer of precious stones, including opal, diamond, ruby, sapphire, and jade. The country is also a significant producer of non-renewable energy sources such as oil and uranium.
The resources sector, including mining, is an important part of Australia's economy, providing export income, royalty payments, and employment. Mining booms have historically contributed to population growth through immigration, such as during the gold rushes of the 1850s. In 2020, mineral exports contributed 62% of Australia's total export revenue, valued at $270 billion. Australia is the world's largest exporter of coal, iron ore, lead, diamonds, rutile, zinc, and zirconium. The mining sector employed about 2% of the total labour force in 2021, with many high-paying jobs in this sector.
Agriculture, forestry, and fishing are also significant industries in Australia, contributing approximately 2.1% of the country's GDP in 2019. 60% of farm products are exported, and this industry was the second-strongest from 2013 to 2015, with a growing number of employees. Australia is a major exporter of agricultural products, particularly wheat and wool.
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The service sector
Australia is a highly developed country with a mixed economy. As of 2023, it was the 14th-largest national economy by nominal GDP (gross domestic product). The Australian economy is dominated by its service sector, which in 2017 made up 62.7% of the GDP and employed 78.8% of the labour force.
The Australian economy is characterised as a "two-speed economy", with Western Australia and the Northern Territory heavily dependent on mining, experiencing significant downturns in GDP. In contrast, the eastern states, particularly New South Wales and Victoria, have returned to growth, led by strong upturns in non-mining sectors such as agriculture, manufacturing, and services.
Service exports have made a noticeable contribution to GDP growth over the past few years, with tourism, education, and business services exports all increasing. IT-related jobs, such as computer systems design and engineering, are also defined as professional services by the Department of Education, Employment, and Workplace Relations of Australia. These jobs are mostly created in the state capital cities of Australia.
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The mining industry
Australia has a highly developed and mixed economy, and mining has long been a significant primary sector industry and contributor. The mining industry accounts for 75% of the country's exports and employs over 10,000 people directly, with many more employed in related sectors.
Mining has been an important source of export income since the colonial era, with silver and copper discovered in South Australia in the 1840s, and coal exported to India as early as 1799. The gold rushes of the 1850s led to a population boom, with Australia's population more than doubling in a decade. This period also saw Melbourne become one of the richest cities in the world.
Australia has a diverse range of mining activities across all states and territories. Western Australia is the epicentre of Australian mining, with significant mining regions including the Goldfields, Peel, and Pilbara. Queensland is a major mining state, with many coal mines located in the Bowen Basin, and it is also the world's largest supplier of silver. The Northern Territory is rich in minerals, including zinc, copper, lead, tungsten, lithium, and gold, with seven high-quality mines operating. Victoria is known for producing gold, antimony, and brown coal, and New South Wales is rich in minerals, including coal, gold, copper, and silver.
Australia is a major exporter of minerals and energy resources, with two-thirds of its exports to China being energy and minerals. Australia was the world's largest producer of iron ore and bauxite in 2019, and it also has the largest hard-rock lithium mine globally, the Greenbushes mine. Australia ranks highly in the production of many other minerals, including gold, manganese, zinc, cobalt, uranium, salt, copper, nickel, silver, and tin.
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Agriculture, fishing and forestry
Australia is a highly developed country with a mixed economy. Agriculture, fishing, and forestry are among the industries that contribute to the country's economy. In 2019, the combined value added from these three industries made up approximately 2.1% of Australia's GDP. While it is a small employing industry, agriculture, forestry, and fishing was the second-strongest industry from 2013 to 2015, with the number of employees growing from 295,495 in February 2013 to 325,321 in February 2015.
Businesses in the agriculture, forestry, and fishing industry are involved in activities such as farming, hunting, fishing, and growers, plantation harvesting, and nurseries. The largest sector within the industry is sheep, beef cattle, and grain farming, employing 116,100 workers. Livestock farmers are the largest occupation within the industry. Overall, the median earnings in this industry are $1,372 per week, which is lower than the median earnings across all industries of $1,700.
The Australian government plays a role in supporting and regulating the agriculture, forestry, and fishing industry. The Department of Agriculture, Fisheries and Forestry provides information and statistics related to the industry, including data on forest and wood products. The Fisheries Research & Development Corporation (FRDC) also provides industry-specific statistics. The government also manages the licences and permits required for businesses in the industry. Additionally, there are general work health and safety regulations, as well as state and territory-specific requirements that businesses need to comply with.
The industry is also subject to specific goods and services tax (GST) measures. Businesses need to register with the Australian Taxation Office (ATO) to claim their GST credits and stay informed about their GST obligations. There are also tax offsets, deductions, and concessions available in the industry. For example, carbon sink forests provide tax deductions for eligible forests.
Australia's agriculture, fishing, and forestry industries are important contributors to the country's exports. Sixty per cent of farm products are exported, with wheat and wool being notable examples. The country has also assumed the Chair of the International Grains Council (IGC), demonstrating its significance in global grain trade.
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Imports and household consumption
Australia has a highly developed and stable economy, ranked 14th in the world by nominal GDP in 2023. The country has a mixed economy, with a dominant service sector that comprised 62.7% of GDP and employed 78.8% of the workforce in 2017. The service sector includes tourism, education, and financial services. Australia also has a strong agricultural sector, being a major exporter of wheat, wool, and other agricultural products.
In terms of imports and household consumption, Australia is a significant player in global trade. The country is the 24th-largest importer of goods globally. Imports of goods and services consist of purchases, barter, or receipts of goods and services by residents from non-residents. While imports do not directly impact GDP, they are considered a negative item in accounting to offset expenditures for consumption, investment, government, and exports.
Household consumption expenditures (HCE) play a crucial role in the Australian economy. Studies have found a positive association between real house prices and the total value of imports. Rising house prices can impact the consumption of different types of goods, with a more significant influence on services imports than on imports of durable and consumable goods. During periods of rising house prices and inflation, households may experience a cash constraint, affecting their consumption patterns.
Australia's imports are influenced by its natural resource endowment and global demand. The country has abundant natural resources, including significant reserves of iron ore, coal, and natural gas. During the 2005-2011 terms of trade boom, global demand for these commodities, driven by urbanization and industrialization in emerging economies like China, led to increased investment in mining and infrastructure. This, in turn, impacted household consumption, as higher demand and wages in the mining and related sectors supported household incomes, giving Australians more money to spend on goods and services.
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Frequently asked questions
Australia is rich in natural resources and is a major exporter of agricultural products, minerals, and energy. The primary sector of the Australian economy is the service sector, which includes tourism, education, and financial services. In 2017, the service sector comprised 62.7% of the GDP and employed 78.8% of the labour force.
Australia has plentiful supplies of natural resources, including iron ore, coal, gold, liquified natural gas, and coal. The country also exports agricultural products, such as wheat, wool, and beef.
Australia's economy is influenced by changes in global demand for its goods and services. For example, an increase in global demand, if not met with a matching increase in supply, will result in a rise in export prices. This was observed during the 2005-2011 terms of trade boom, driven by increased demand for steel and energy from emerging economies like China.
The federal government collects revenue through personal income taxes and business taxes. Other sources of revenue include the goods and services tax (GST), excise, and customs duties.
The level of imports in Australia depends on the strength of aggregate demand, including household consumption, investment, and government purchases. Additionally, imports are generally higher when the Australian dollar exchange rate is stronger, as it becomes more economical to buy goods and services from overseas.
