Lexi Webster
Australia's gross domestic product (GDP) is made up of several factors, including its strong commodity exports, robust domestic consumption, and economic growth. The country experienced a pandemic-induced recession in 2020, but its economy proved resilient, maintaining growth even during commodity price downturns. Australia's GDP is also influenced by its mining and resource-based industries, with Western Australia and the Northern Territory being the only states with economic growth between 2010 and 2013. The manufacturing industry has declined over the years, and the country faces a housing crisis, with a shortfall of about 60,000 homes per year. Australia's transport sector, including road and rail networks, also contributes significantly to its GDP, serving various industries such as agriculture, forestry, and fishing.
| Characteristics | Values |
|---|---|
| Manufacturing industry | 30% of GDP in the 1960s, 12% of GDP in 2007 |
| Textile industry | Large industry until trade liberalisation in the mid-1980s |
| Value added from agriculture, fishing and forestry | 2.1% of Australia's GDP in 2019 |
| Transport activity | 7.9% to GDP in 2020-21 |
| Roads | Over $245 billion to economic activity |
| Mining | Large build-up in inventories in March 2025 |
| Exports | 60% of farm products exported |
| International students | 525,054 in 2018, comprising a market of 32.2 billion AUD |
| Net trade | Detracted 0.1% from GDP growth |
| Exports of services | Led fall in exports, down 3.0% |
| Exports of goods | Down 0.3%, led by coal and liquefied natural gas (LNG) exports |
| Imports | Down 0.4% |
| Crude oil and petroleum products | 80% import dependency |
| Economic growth | 1.04% in 2024, 2.57% in 2014, 2.06% in 2023, averaged 2.31% over the last decade |
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What You'll Learn
Mining and resource-based industries
The mining industry's contribution to Australia's GDP has grown over the years, increasing from around 4.5% in 1993-94 to almost 8% in 2006-07. More recently, in 2019, the mining industry contributed 8.4% of GDP. Mined resources now account for over 13% of Australia's annual GDP. This growth has come at the expense of the manufacturing sector, which has declined from 30% of GDP in the 1960s to 12% in 2007.
Australia's mining sector is the country's largest export industry, generating over $2.4 trillion in export revenue over the past decade. The industry has brought in $252 billion in wages, $143 billion in company taxes, and $112 billion in revenue royalties. This revenue has been reinvested in the Australian economy, benefiting areas such as welfare, healthcare, defence, education, and public services.
The country's vast mineral resources include iron ore, gold, diamonds, and rare earth minerals. Australia is ranked sixth globally for rare earth mineral deposits and is developing its rare earth metal and mineral industry independently of China's dominant market. The mining sector is heavily reliant on rail transport to export its products through Australia's ports.
While the mining industry has experienced recent declines, it has been crucial in helping Australia navigate unpredictable economic situations, such as during the pandemic when Australia achieved its largest-ever trade surplus of $123 billion. The industry's contributions have helped the Australian economy grow by 21% over the past decade, showcasing its importance to the nation's economic success and resilience.
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Agriculture, fishing, forestry
Agriculture, fishing, and forestry are important sectors that contribute to Australia's GDP. In 2019, these sectors combined made up approximately 2.1% of Australia's GDP. This contribution has fluctuated over the years, with an annual average of 3.053% from 1976 to 2023.
Agriculture in Australia includes activities such as the cultivation of crops and livestock production. The country's agricultural sector is significant, with 60% of farm products being exported. Irrigation is an important practice in Australia due to the low rainfall in many regions.
Fishing, which is also a part of the agriculture sector, contributes to the GDP through activities like commercial fishing and seafood exports. Forestry, on the other hand, involves the production of timber and wood products, as well as activities like reforestation and forest management.
The value added by these sectors is calculated as the net output after subtracting intermediate inputs. This calculation does not include deductions for depreciation or the depletion of natural resources. The contribution of these sectors to Australia's GDP is essential, and their performance can impact the overall economic growth of the country.
Australia's transport infrastructure, including roads, rail networks, and airports, plays a crucial role in supporting these sectors. It facilitates the movement of goods, including agricultural produce, fishing exports, and forestry products, to domestic and international markets. The transport sector also enables the import of necessary resources and equipment for these industries.
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Manufacturing
The manufacturing industry in Australia has declined from 30% of GDP in the 1960s to 12% of GDP in 2007. In 2019, agriculture, fishing, and forestry combined made up approximately 2.1% of Australia's GDP. The manufacturing sector has faced competition from the mining and services sectors, which have experienced significant growth in recent years.
The Australian economy is heavily dependent on road transport, with an estimated contribution of more than A$245 billion to the economic activity. This benefits the manufacturing industry, among other sectors. However, the manufacturing industry in Australia has been in decline since the mid-1980s, when trade liberalisation measures were implemented. These policies reduced tariffs on imported goods, making it harder for Australian manufacturers to compete with foreign producers. As a result, by 2010, most textile manufacturing, even by Australian companies, was being performed in Asia.
The decline of the manufacturing industry in Australia is further highlighted by the cessation of car production by major companies. In 2008, only four companies mass-produced cars in the country, and by 2017, all of them had ceased production. Mitsubishi ended production in March 2008, followed by Ford in 2016, and Holden and Toyota in 2017.
Despite the overall decline, there have been some positive developments in the manufacturing sector. In 2025, manufacturing inventories saw a build-up with increased production of gold, steel, and alumina. This contributed to GDP growth, indicating a potential resurgence in certain areas of manufacturing.
The Australian economy as a whole has demonstrated resilience and stability, avoiding a recession from 1991 to 2020. The emphasis on exporting commodities has contributed to a significant increase in Australia's terms of trade since 2000. Additionally, Australia has a highly efficient social security system, which comprises approximately 25% of GDP, further supporting the economy and its industries, including manufacturing.
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International education
International students make up a significant proportion of Australia's tertiary education system, with their numbers more than tripling in the three decades leading up to 2019. By 2019, international students comprised 32.4% of all students in tertiary education, an increase from 5.4% in 1990. This massive increase is largely due to a reduction in government funding for tertiary education since the early 1990s. The three largest source countries for international students in Australia are China, India, and Nepal, with these countries contributing a significant economic boon.
The economic impact of international education extends beyond the fees paid by students. The presence of international students also supports other sectors of the economy, including transport, agriculture, and tourism. In addition, international education helps to strengthen Australia's social and cultural fabric and fosters international friendships and research partnerships.
Looking forward, there is a positive outlook for the sector, with nearly 80,000 international students arriving in Australia in a single month in 2023, more than double the number in the same period the previous year. The ongoing recovery and growth of international education are expected to further boost Australia's economy and standard of living.
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Housing
The high cost of housing in Australia has led to a situation where Australians are carrying record levels of debt to pay for homes. OECD data shows that Australians are the fifth most indebted in the world, with a household debt-to-disposable income ratio of more than 200%. The high cost of housing is also impacting the living standards of future generations, with young people and the poor bearing the largest cost.
Population growth has driven demand for additional dwellings, but the national housing build has changed little over the past decade. This has resulted in a lack of available supply of affordable homes, with research indicating that those in housing stress are likely to remain in that situation. The problem is exacerbated by policies that have failed to keep up with the changing dynamics of the housing market, such as the failure to address the lack of supply responsiveness in the market.
The high cost of housing has also had an impact on the Australian economy as a whole. The value of mortgages held by major banks has soared, and there are concerns that the economy has become too reliant on the housing market. This has led to a situation where the health of the housing market is seen as a key indicator of the overall health of the economy.
The Australian government has implemented programs such as the National Rental Affordability Scheme and the Housing Affordability Fund to address the issue of housing affordability. However, it remains to be seen if these programs will be successful in increasing the supply of affordable homes and improving the efficiency of the housing market.
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Frequently asked questions
In 2024, Australia's economic growth was 1.04%, compared to 2.57% in 2014 and 2.06% in 2023.
Australia's GDP is influenced by various factors, including exports, imports, manufacturing, mining, and changes in inventories. International student spending and travel services also play a role in GDP growth.
The manufacturing industry in Australia has declined over the years. It contributed 30% of GDP in the 1960s but decreased to 12% of GDP in 2007.
The mining industry significantly impacts Australia's GDP. Reduced export demand, port closures, and weather disruptions can affect mining shipments and, consequently, economic growth.
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