Lexi Webster
Australia is a high-income country, as classified by the World Bank. The World Bank classifies economies into four income groups: low, lower-middle, upper-middle, and high income. This classification is based on a country's gross national income (GNI) per capita. As of the 2025 fiscal year, high-income economies are defined as those with a GNI per capita of $13,206 or more in 2024. Australia's economy is highly developed and diversified, with a strong emphasis on exporting commodities. It has a high sovereign credit rating, and as of 2023, it was the 14th-largest national economy by nominal GDP.
| Characteristics | Values |
|---|---|
| Country classification based on | Gross National Income (GNI) per capita |
| GNI per capita for high-income economies | $13,206 or more |
| Australia's ranking in 2023 | 14th-largest national economy by nominal GDP |
| Australia's sovereign credit rating | AAA |
| Australia's GDP as of June 2021 | $1.98 trillion |
| Australia's economy | Mixed |
| Dominant sector | Service sector |
| Percentage of GDP contributed by the service sector in 2017 | 62.7% |
| Percentage of the labour force employed in the service sector in 2017 | 78.8% |
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What You'll Learn
Australia's mixed economy
Australia is a highly developed country with a mixed economy. In 2023, it 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. Australia has had 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. As of June 2021, the country's GDP was estimated at $1.98 trillion.
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 mining industry, at its peak in 2009-10, contributed 8.4% of GDP.
Australia's wealth grew by 4.4% annually on average after the 2008 financial crisis, compared to 9.2% growth over 2000-2007. Australia's sovereign credit rating is "AAA", higher than that of the United States. This growth was underpinned by a focus on exporting commodities, which increased Australia's terms of trade during the rise in commodity prices since 2000.
The World Bank classifies economies into four income groups: low, lower-middle, upper-middle, and high income. This classification is based on a country's gross national income (GNI) per capita. For the 2023 financial year, the World Bank defined high-income economies as those with a GNI per capita of $13,206 or more. Australia is classified as a high-income economy by the World Bank, alongside 80 other countries, including the United States, Canada, and Japan.
While the World Bank classifies countries by income, the United Nations groups countries by their level of overall development. There is a high correlation between the two systems, as development often parallels income. Countries deemed "high income" by the World Bank are typically considered "developed" by the United Nations.
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High gross national income (GNI) per capita
Australia is a high-income country, according to the World Bank's classification. This classification is based on a country's gross national income (GNI) per capita. GNI per capita is a measure of a nation's total income divided by its population. It is calculated by taking a country's gross domestic product (GDP), adding the income generated by its citizens and businesses from overseas, and then subtracting the money taken out of the economy by foreign businesses and investors.
For the 2023 financial year, the World Bank classified high-income economies as those with a GNI per capita of $13,206 or more in 2021. This threshold has been revised for the 2025 fiscal year to $13,935 or more in 2024. Australia's GNI per capita is above this threshold, placing it in the high-income category.
Australia's high GNI per capita is influenced by several factors, including its strong economic performance and export-oriented approach. Following the 2008 financial crisis, Australia's wealth grew by 4.4% annually on average, and the country boasts a "AAA" sovereign credit rating from all three major rating agencies. Australia's economy is dominated by its service sector, which comprised 62.7% of GDP and employed 78.8% of the labour force in 2017. Additionally, the country has benefited from a focus on exporting commodities, which has improved its terms of trade since 2000.
It is worth noting that despite Australia's high GNI per capita, there are still pockets of poverty within the country. A 2022 report by ACOSS revealed that an estimated 13.5% of the population, or 3.3 million people, live below the internationally accepted poverty line. This figure includes 17.7% of children under the age of 15, and Indigenous Australians face significantly higher poverty rates, with 30% of Indigenous households experiencing income poverty.
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Strong economic health
Australia is a highly developed country with a strong and stable economy. It has a mixed economy, with a dominant service sector that comprised 62.7% of its GDP and employed 78.8% of its labour force in 2017. Australia has the 14th-largest national economy by nominal GDP, the 19th-largest by PPP-adjusted GDP, and was the 21st-largest goods exporter and 24th-largest goods importer as of 2023.
Australia has a high gross national income (GNI) per capita, which is a key indicator of economic health and a measure of a nation's total income divided by its population. In 2023, the World Bank classified high-income economies as those with a GNI per capita of $13,206 or more. Australia's GNI per capita was high enough for it to be included in the World Bank's list of high-income economies for that year.
Australia's strong economic health is further evidenced by its long run of uninterrupted GDP growth. As of March 2017, Australia had gone 103 quarters and 26 years without a technical recession, setting a record for the longest growth streak in the developed world. By June 2021, the country's GDP was estimated at $1.98 trillion.
Australia's sovereign credit rating is also strong, with a "AAA" rating from all three major rating agencies, which is higher than that of the United States. This indicates that Australia has a low risk of defaulting on its sovereign debt obligations.
Despite these indicators of strong economic health, there are some challenges. Australia has persistent current account deficits, with a deficit of AUD$44.5 billion in 2016, or 2.6% of GDP. There is also a housing crisis, with a shortage of affordable homes and rising rents and housing costs. Additionally, poverty is growing in Australia, with an estimated 13.5% of the population living below the internationally accepted poverty line in 2022.
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Persistent current account deficits
Australia is a high-income country, according to the World Bank's classification system, which is based on a country's gross national income (GNI) per capita. The World Bank classifies economies into four income groups: low, lower-middle, upper-middle, and high income. For the 2023 financial year, the high-income threshold was a GNI per capita of $13,206 or more.
One factor contributing to Australia's status as a high-income country is its strong economic performance in recent years. In 2022, 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 also held the record for 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 had a technical recession.
However, Australia has also experienced persistent current account deficits for over 60 years. A current account deficit occurs when a country's net income outflow exceeds its net income inflow, resulting in a negative balance of payments. This can be influenced by factors such as the structure of a country's economy, its level of savings and investment, and its trade policies.
In the case of Australia, the current account deficit is partly due to the country's colonial heritage, which has resulted in a significant number of foreign-owned companies operating within its borders. This means that a substantial portion of Australia's economic output is owned by and benefits foreign entities, contributing to a persistent current account deficit. Despite this, Australia has experienced periods of positive net merchandise exports, and the current account deficit has not prevented the country from achieving high-income status.
The impact of current account deficits on a country's economy is complex and multifaceted. While a current account deficit can indicate that a country is consuming more than it is producing, it can also be a result of factors such as foreign investment inflows, which can contribute to economic growth. In Australia's case, the current account deficit has coexisted with strong economic performance and high-income status. Managing current account deficits and ensuring that they do not lead to unsustainable debt levels is a key challenge for policymakers in high-income countries like Australia.
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High poverty rates for Indigenous Australians
Australia is a highly developed country with a mixed economy, ranking 14th in the world for its nominal GDP in 2023. It has a high GDP per capita, a measure used by the World Bank to classify countries as high-income economies. However, this overall economic success masks the high poverty rates experienced by Indigenous Australians.
Indigenous Australians have faced discrimination, marginalization, and genocide since the British colonization of the continent in 1788. Although they gained recognition in the eyes of the government in 1967, this did not eliminate the discrimination and inequality they often face. The legacy of colonization has resulted in Indigenous Australians being over-represented in lower-income bands. They experience higher rates of poverty than non-Indigenous Australians, with 19.3% of Aboriginal Australians living in poverty compared to 12.4% of other Australians.
The median gross weekly household income for Indigenous Australians is significantly lower than that of non-Indigenous Australians. In 2021, the gap in median gross weekly household income between the two groups was $316, a decrease from the gap of $379 in 2011. Indigenous Australians also face higher rates of unemployment, with only 4.8% of Aboriginal peoples employed within the upper salary levels in Australia. This may be due in part to pervasive racism within the country, with 26% of Australians holding anti-Aboriginal sentiments.
The issue of poverty among Indigenous Australians is complex and multifaceted. There are challenges in measuring income poverty in Aboriginal communities, and traditional measures of income may not accurately reflect the economic situation of these communities. For example, the concept of family structure differs between Indigenous and non-Indigenous communities, with Indigenous communities often having a collective system of resource sharing that extends beyond the nuclear family. Additionally, there is evidence of Indigenous Australians being underpaid or not paid at all for their work, a practice known as 'stolen wages', which has had intergenerational effects and contributed to the poverty conditions many Indigenous Australians experience today.
The Australian government has implemented initiatives to address poverty among Indigenous Australians and improve their social and economic outcomes. These initiatives focus on education, health, and empowerment within Indigenous communities. While these initiatives are a step in the right direction, there is still much work to be done to reduce the high poverty rates experienced by Indigenous Australians and to address the systemic inequalities that contribute to their economic deprivation.
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Frequently asked questions
A high-income country is classified by the World Bank as a country with a gross national income (GNI) per capita above a certain threshold. For the 2023 financial year, the threshold was a GNI per capita of $13,206 or more.
Australia's GNI per capita is above the high-income threshold set by the World Bank.
Australia has a mixed economy with a strong emphasis on exporting commodities. It has a high credit rating, and in 2021, its GDP was estimated at $1.98 trillion. The service sector dominates the Australian economy, comprising 62.7% of the GDP and employing 78.8% of the labour force in 2017.
Yes, Australia is a highly developed country.
There is a high degree of correlation between a country's development and its income. Countries classified as high-income by the World Bank often correspond to those deemed developed by the United Nations.
