Lexi Webster
Australia is considered a highly developed country with a strong economy, ranking highly for quality of life, health, education, economic freedom, civil liberties, and political rights. It has one of the highest per capita incomes globally and is a member of several international organizations, including the G20, the OECD, and the World Trade Organization. Australia's economy is heavily based on mining and natural resources, and it has a mixed market with a dominant service sector. Despite facing challenges, such as a decline in real disposable income and the impact of the COVID-19 pandemic, Australia has demonstrated economic resilience and maintained strong trade relations with other countries.
| Characteristics | Values |
|---|---|
| Economy | Highly developed mixed-market economy |
| GDP | 14th-largest national GDP by nominal GDP as of 2023 |
| 19th-largest by PPP-adjusted GDP as of 2023 | |
| Trade | One of the world's top 25 importers and exporters |
| Highly developed international trade relations | |
| Member of the World Trade Organization | |
| Per capita income | One of the highest per capita incomes globally |
| Research | Top 10 research contributors in the world |
| Human Development Index (HDI) | Above 0.900 (very high) |
| Education | Scores among the top five of thirty major developed countries in the Programme for International Student Assessment |
| Political System | Democracy |
| Civil Rights | Strong protections for civil and political rights |
| Signed up to a wide range of international rights treaties | |
| Same-sex marriage has been legal since 2017 | |
| Military | 13th-highest military expenditure in the world |
| Tourism | Employed 646,000 people in 2017-18 (5.2% of the workforce) |
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What You'll Learn
Australia's economy is based on raw materials
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). Australia has the longest run of uninterrupted GDP growth in the developed world, with the March 2017 financial quarter marking the 103rd quarter and the 26th year since the country experienced a technical recession.
Australia's economy is heavily reliant on raw materials. The country has plentiful supplies of natural resources, including the second-largest accessible reserves of iron ore in the world, the fifth-largest reserves of coal, and significant gas reserves. Commodities, including iron ore, coal, and natural gas, have made up a sizeable share of Australia's exports for a long time. During the height of the mining boom in 2009-10, the total value-added of the mining industry was 8.4% of GDP.
The large-scale investment in the mining sector, along with higher incomes, increased overall demand in the Australian economy. This led to an increase in labour demand, which resulted in higher wages and inflationary pressures. The increase in the terms of trade also led to an appreciation of the Australian dollar. The mining sector's growth positively impacted other sectors of the economy, including construction, engineering, finance, insurance, legal, and transport.
However, Australia's heavy reliance on raw materials and exports has made its economy vulnerable to global commodity price volatility. The country has persistently large current account deficits due to its export base, which can be negatively affected by fluctuations in commodity prices. Additionally, due to its colonial heritage, many companies operating in Australia are foreign-owned, contributing to a negative net income outlay with the rest of the world.
Australia's economy is also influenced by other factors, such as tourism, creative industries, international education, and its proximity to booming economies like China. The service sector dominates the economy, comprising 62.7% of GDP and employing 78.8% of the labour force in 2017. Australia's total wealth was estimated at AUD$10.9 trillion as of September 2019, and it became the country with the largest median wealth per adult in 2018, slipping to second place after Switzerland in 2019.
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The country's colonial past
Australia is considered a highly developed country with a mixed-market economy. It has one of the highest per capita incomes globally, and its economy is dominated by its service sector. Australia has a strong commitment to multilateralism and is a member of several defence, intelligence, and security groupings. It also has strong protections for civil and political rights, with important documents such as the Constitution, the Racial Discrimination Act 1975, and the Sex Discrimination Act 1984 in place.
Australia's colonial past also contributed to its economic growth. The country has abundant natural resources, and its economy is heavily based on mining and natural resources. During the global recession from 2008 to 2009, Australia's economy was not significantly affected due to its proximity to the booming Chinese economy and the related mining boom. Australia's stable economy and government stimulus spending of $11.8 billion helped it weather the crisis with minimal disruption.
Additionally, Australia's colonial past has influenced its cultural diversity. The country has one of the highest foreign-born populations in the world, and its major cities, Sydney and Melbourne, each have a population of over five million. Australia has a strong relationship with its neighbouring country, New Zealand, with free mobility of citizens between the two countries under the Trans-Tasman Travel Arrangement.
Despite its colonial past, Australia has faced some challenges in maintaining its development. For example, Australian households experienced the sharpest decline in real disposable income of any country in the OECD from 2019 to 2024, with an 8.0% drop in real per capita household disposable income. This has raised concerns about the government's management of the cost-of-living crisis. However, Australia's overall economic resilience and stable political system have contributed to its status as a highly developed country.
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Australia's banking system
Australia is a highly developed country with a sophisticated, competitive, and profitable banking system. The financial services industry in Australia is made up of several streams, including banks, building societies, credit unions, insurance, and more. The central bank is the Reserve Bank of Australia (RBA), which is responsible for formulating and implementing the country's monetary policy. The RBA sets the target cash rate, which is the interest rate that banks pay or charge to borrow funds from other banks on unsecured overnight loans. The RBA is also responsible for ensuring the stability of Australia's financial system and acts as the lender of last resort in times of liquidity crises.
The Australian banking system is dominated by the "big four" banks: Commonwealth Bank, Westpac, Australia and New Zealand Banking Group, and National Australia Bank. These banks are among the world's largest and safest and are highly profitable. The financial services sector is the largest contributor to the national economy, contributing around $140 billion to GDP annually and employing 450,000 people.
The Australian banking system has a history of innovation, including the introduction of EFTPOS technology in the 1980s and, more recently, digital cheque imaging, which has sped up the clearing process. The country's banking system was ranked the fourth best in the world by the World Economic Forum in 2009, and Australia was one of the few countries to avoid a recession during the 2008-2009 global financial crisis.
However, there have been concerns about the management of Australia's cost-of-living crisis, with households experiencing a decline in real disposable income and a sustained erosion of purchasing power. Despite these challenges, Australia's economy and banking system remain resilient and stable.
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The country's human rights record
Australia is considered a highly developed country with a mixed economy. In 2023, it was the 14th-largest national economy by nominal GDP (gross domestic product). However, its human rights record has been criticised by the United Nations Human Rights Committee.
In 2017, the committee released its recommendations from a review of Australia's compliance with the International Covenant on Civil and Political Rights. The review highlighted areas of improvement, including the establishment of the Parliamentary Joint Committee on Human Rights and the introduction of protections against discrimination on the grounds of sexual orientation, gender identity, and intersex status. Australia's commitment to ratifying the Optional Protocol on the Convention against Torture was also commended.
However, the committee's criticisms far outweighed these improvements. Australia's refugee policy was widely criticised for breaching its human rights obligations, including concerns about refoulement, mandatory detention, Operation Sovereign Borders, and offshore detention. The committee also criticised previous attacks by politicians on the Australian Human Rights Commission and recommended that the government respect the independence of that body.
Australia's treatment of Indigenous people and lack of a national human rights act were also areas of concern. The committee noted a history of "chronic non-compliance" with its recommendations and urged the government to implement substantive changes to promote and protect human rights.
Australia has participated in the Universal Periodic Review (UPR) process at the United Nations Human Rights Council, which involves a periodic review of the human rights records of all UN Member States. The UPR provides an opportunity for Australia to assess its protection of human rights and engage with other countries on steps to improve. The Australian Human Rights Commission has also published submissions under the UPR process, highlighting human rights challenges and the government's commitment to reforms.
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Australia's international trade relations
Australia is a highly developed country with a mixed economy. As of 2023, Australia was the 14th-largest national economy by nominal GDP (gross domestic product). International trade and investment are critical to the Australian economy, creating jobs and prosperity, and opening up opportunities for Australian businesses to expand.
Australia's foreign policy is guided by a commitment to multilateralism and regionalism, as well as building strong bilateral relations with its allies. The country's key concerns include free trade, terrorism, refugees, economic cooperation with Asia, and stability in the Indo-Pacific.
Australia is a member of international organisations such as the World Trade Organization (WTO), the G20, Asia-Pacific Economic Cooperation (APEC), and the Organisation for Economic Cooperation and Development (OECD). These memberships help Australia build its economic growth and prosperity.
Australia has bilateral Free Trade Agreements (FTAs) with several countries, including New Zealand, the United States, Thailand, Singapore, and the United Kingdom. An FTA is an international treaty between two or more economies that reduces or eliminates certain barriers to trade in goods and services, as well as investment.
In addition to its bilateral FTAs, Australia is also a part of the Regional Comprehensive Economic Partnership Agreement (RCEP) along with nine other countries in the region. Australia also has an economic cooperation and trade agreement with India.
Australia's largest trading partners include the United States, South Korea, Japan, China, and the United Kingdom. The country has established formal diplomatic relations with all members of the United Nations, as well as the Holy See, Kosovo, the Cook Islands, and Niue.
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. Tourism is also a significant contributor to the economy, employing 646,000 people in 2017-18 and contributing 8.0% of Australia's total export earnings in 2010-11.
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Frequently asked questions
Australia is a highly developed country with a mixed economy. It has one of the highest per capita incomes globally and ranks highly for quality of life, health, education, economic freedom, civil liberties and political rights.
Australia has a strong commitment to multilateralism and is a member of several defence, intelligence and security alliances. It has a resilient and stable economy, which did not experience a recession from 1991 to 2020. It has a booming mining sector and is highly dependent on road transport.
Australia's economy is dominated by its service sector, which employed 78.8% of the labour force in 2017. The country also has abundant natural resources and well-developed international trade relations.
Australia is a middle power with the world's thirteenth-highest military expenditure. It is a member of international groups including the United Nations, the G20, the OECD, the World Trade Organization, and the Pacific Islands Forum, among others. Australia also maintains an international aid program that assists around 75 countries.
