Ruqayyah Snyder
Australia is a highly developed country with a mixed economy. As of 2023, it was the 14th-largest economy in the world by nominal GDP, with a GDP of $1.98 trillion in 2021. Australia's economy is dominated by its service sector, which in 2017 comprised 62.7% of GDP and employed 78.8% of the labour force. The country's 'big four banks are among the world's safest, and its stock exchange in Sydney is the 16th-largest in the world. Australia's economy is strongly intertwined with the countries of East and Southeast Asia, particularly China, its main export and import partner.
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What You'll Learn
Australia's GDP growth
Australia is a highly developed country with a mixed economy. As of 2023, Australia was the 14th-largest national economy by nominal GDP, the 19th-largest by PPP-adjusted GDP, the 21st-largest goods exporter, and the 24th-largest goods importer.
Australia has enjoyed strong and uninterrupted GDP growth over the years. In March 2017, Australia achieved the longest run of uninterrupted GDP growth in the developed world, marking the 103rd quarter and the 26th year since the country had a technical recession. During the global financial crisis of 2008-2009, Australia's economy proved resilient, avoiding the recession that affected many Western nations. This resilience can be attributed to various factors, including government stimulus spending, its close ties with the booming Chinese economy, and a thriving mining sector.
The mining industry has been a significant contributor to Australia's economic growth since the 1840s gold rush. In the 1960s and 1970s, Western Australia, in particular, benefited from mining iron ore and gold, fueling the state's economic development. The mining boom of 2009-2010 saw the total value-added of the mining industry reach 8.4% of GDP. Despite a recent decline in the mining sector, Australia's economy has remained stable, avoiding a recession from 1991 until 2020.
Australia's average GDP growth rate for the period 1901-2000 was 3.4% annually, with growth peaking during the 1920s, 1950s, and 1980s. The country's GDP was estimated at $1.98 trillion as of June 2021. The service sector dominates the economy, comprising 62.7% of GDP and employing 78.8% of the labour force in 2017.
Tourism also contributes significantly to Australia's GDP, with domestic tourism playing a key role. In the financial year 2017/18, tourism represented 3.1% of Australia's GDP, contributing A$57.2 billion to the national economy. Western Australia, a state heavily focused on exports, attracts many international visitors and students, further boosting the country's economic growth.
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The Australian dollar
The first paper issues of the Australian dollar were also issued in 1966, with $1, $2, $10, and $20 notes having exact equivalents in the former pound notes. The $5 note was issued in 1967, the $50 in 1973, and the $100 in 1984. The $1 banknote was replaced by a $1 coin in 1984, and the $2 banknote was replaced by a smaller $2 coin in 1988. All previous notes of the Australian dollar remain legal tender, even though they are no longer printed.
In April 2022, the Australian dollar was the sixth most-traded currency in the foreign exchange market and, as of Q1 2024, it was the sixth most-held reserve currency in global reserves. The Australian dollar's 30% drop in 2009 was seen as a boon for trade, shielding the country from the global financial crisis and helping to slow growth and consumption.
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Australia's banking system
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 comprised 62.7% of the GDP and employed 78.8% of the labour force.
The four largest retail banks in Australia are Westpac Banking Corporation, Commonwealth Bank of Australia, Australia and New Zealand Banking Group (ANZ), and National Australia Bank (NAB). They are among the 'World's 50 Safest Banks' and all have AA– ratings. These four banks have around $960 billion of assets on their domestic books, equivalent to about 100% of GDP, and account for around two-thirds of the total assets of the Australian banking system. Each of them also has operations overseas, with the largest being in New Zealand.
The Australian banking system is undergoing progressive deregulation and privatisation. There are 53 banks operating in Australia, 14 of which are predominantly Australian-owned, and 39 foreign-owned banks, collectively accounting for 20% of domestic banking system assets. The Australian Government permits non-Australian banks to operate as branches to serve the wholesale market, but banking regulations only allow retail banking activities through a locally incorporated subsidiary.
Banks play a central role in the Australian financial system, holding the majority of financial system assets. In addition to traditional retail deposit-taking and lending activities, banks are involved in almost all other facets of financial intermediation, including business banking, trading in financial markets, stockbroking, insurance, and funds management. The rapid expansion of banks' domestic balance sheets reflects both demand and supply factors, notably in the housing lending market. The Reserve Bank of Australia (RBA) sets monetary policy and regulates the payment system. The Australian Prudential Regulation Authority (APRA) oversees banks, credit unions, building societies, insurance companies, and most members of the superannuation industry.
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The mining industry
Mining has long been a significant primary sector industry in Australia, contributing substantially to the country's economy through exports, royalty payments, and employment. At the height of the mining boom in 2009-10, the total value-added of the mining industry was 8.4% of Australia's GDP. Western Australia (WA) is the epicentre of Australian mining and a major player in the international mining industry, hosting a significant number of high-grade resources and some of the largest mines in the country.
Historically, mining booms have encouraged population growth through immigration to Australia, particularly during the gold rushes of the 1850s. The discovery of gold in Victoria's Ballarat in 1851, for instance, sparked a gold rush that made Melbourne one of the richest cities in the world. During this period, Australia's population surged from 437,655 in 1851 to 1,151,957 a decade later. While most Victorian goldfields were exhausted by the end of the 19th century, the wealth generated during this time funded substantial development in industry and infrastructure.
Australia has a diverse range of mining activities across all its states and territories. The country is a world leader in producing and exporting various metals and minerals. In 2019, Australia was the largest producer of iron ore, bauxite, and lithium by weight, as well as the world's largest producer of opal. It was also the second-largest producer of gold, manganese, lead, and rare earths; the third-largest of zinc, cobalt, and uranium; and the sixth-largest of copper and nickel, among other minerals. The country also has significant coal reserves and is one of the world's major coal producers and exporters.
The United States is one of the largest exporters of mining equipment to Australia, and the two countries have strengthened their partnership in developing critical minerals assets. Australia's abundant reserves of critical minerals are crucial for communications, renewable energy, and defence industries. The Australian mining industry is poised for continued growth and exploration, with almost 80% of the country's mineral potential yet to be explored.
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Tourism
The Australian government recognises the importance of the tourism industry and has implemented initiatives to support its growth. The National Sustainable Tourism Framework ensures aligned definitions and goals across all state and territory jurisdictions. The government has also launched the "Come and Say G' day" global campaign to help support and rebuild the industry. Additionally, a $48 million tourism and travel package was announced in the October 2022 Budget.
Central Australia relies on tourism more than any other state or territory in the country. In 2007/08, the total value of the tourism output in Central Australia was $411 million, accounting for 24.8% of the region's overall output. Tourism creates numerous jobs and has a significant economic impact on the local communities.
The World Economic Forum ranks Australia first for natural resources, recognising both its natural beauty and highly developed outdoor tourism industry. Australia's proximity to fast-growing markets in the Asia-Pacific region also positions it well to recapture a significant share of global travel spend. The country's political stability and resilient economy offer a safe and low-risk environment for businesses and investors.
While tourism provides economic benefits, it is also a form of soft power, shaping how the world perceives a nation through its culture, values, and hospitality. Every visitor who feels welcomed and appreciated contributes to a positive perception of the country.
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Frequently asked questions
As of 2023, Australia was the 14th-largest national economy by nominal GDP (gross domestic product), the 19th-largest by PPP-adjusted GDP, the 21st-largest goods exporter, and the 24th-largest goods importer. In June 2021, the country's GDP was estimated at $1.98 trillion.
Australia's economy is dominated by its service sector, which in 2017 comprised 62.7% of the GDP and employed 78.8% of the labour force. Australia's agricultural sector also plays a significant role in the economy, with livestock grazing and cropping being the primary activities. The mining industry has also been a significant contributor to the economy, accounting for 8.4% of GDP during the mining boom in 2009-10.
Australia has a strong and resilient economy, which has remained stable over the years. The country has strong trade ties with East and Southeast Asian countries, particularly China, which is Australia's main export and import partner. Australia's economy is expected to continue growing, with the Australian Securities Exchange in Sydney being the 16th-largest stock exchange in the world. However, there have been recent challenges, such as inflationary pressures and the need to decarbonise the agriculture sector.
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