The Australian economy is one of the few global economies that seem to have partially escaped the effects of the recent global recession. Low unemployment rates, controlled inflation, low public debt and a stable financial system characterize this robust economy. As of 2012, the economy had enjoyed more than 20 years of uninterrupted growth, with the growth rate averaging 3.5% p.a. The growth, attributed to the increase in demand for resources from Asia and especially China, is evident in all indicators of economic performance.
– Employment in Australia
Australia’s unemployment rate is significantly low, and the country ranks as one of the rich countries with the lowest unemployment rates in the world. In the past five years, the unemployment rate in Australia has averaged between 5 and 6%. The highest rate of unemployment for the period was 6.2%, recorded in November 2014. This reduced to 6.1% by December 2014. Currently, the unemployment rate stands at 6.1%. Unemployment rate in Australia has been on an upward trend since 2012 despite the increase in the number of jobs in the labor market. This is attributable to the growing number of new entrants into the labor market.
– Gross Domestic Product Growth
Australia is one of the largest capitalist economies globally. As of 2014, the Australian economy had a GDP of US$1.525 trillion, representing approximately 2% of the global economy. It ranked as the 12th largest economy in terms of nominal GDP in 2012, and the 21st largest in terms of PPP-adjusted GDP in 2013. Australian GDP has had a growth rate of 0.3 percent and an annual growth rate of 2.7%. The major contributor to the GDP is the resource sector. Some of the biggest contributors include the services sector such as tourism, financial services, and education at 69%. Mining and mining-related industries stand at 19%.
– Inflation and Interest Rates
The Australian economy enjoys relatively low inflation rates. Since 2009, the inflation rate has stabilized at between 2-3%, occasionally going below 1% and above 3%. The current inflation rate is 1.7%. The Australian government aims at maintaining an inflation rate of between 2-3%. The low inflation rates have contributed to very friendly interest rates. As of 2009, the Reserve Bank of Australia’s interest rates stood at 3.2% before rising to a five-year high of 4.5% and then falling to the current 5-year low of 2.5%.
– The Stock Market
The robust economic growth in the Australian economy reflects in the stock market. From slightly above 4500 (S&P/ASX 200) index points in 2009, the stock market has grown to 5569.50 in January 2015, up 158.69 index points in December 2014. The main stock market index, S&P/ASX 200 tracks performance of 200 big companies in Australia. The index, weighted by market capitalization, has a base value of 3133.3AUD.
– The Australian Dollar
The Australian dollar has also shown promising growth, increasing in value against all major currencies. In the last five years, for instance, it has risen in value by two-thirds against the US dollar, to exchange at $1.05. Late 2013 and early 2014 represented a phase in which the Australian dollar was falling in value, discouraging those in the money market. Its value rose again in mid and late 2014, and it has stayed strong since then.
– Economic Forecast
Judged by all measures of economic performance, the Australian economy is a robust one. Even though critics have warned that, it is growing at a less than optimal rate, it continues to post impressive rates. Economic experts had forecasted a growth of 3% in 2014-15. Organization for Economic Cooperation and Development (OECD), predicted the GDP of the Australian economy to grow by 2.3% in 2015 and 2.6% in 2016. Unemployment rate will rise to 7.0% in 2015 and then drop to 6.8% in 2016 owing to the improvement in economic conditions. Inflation rates will drop to 1.6% before rising to 1.9% in 2016. nbsp; These figures differ significantly from those of the Australian government that stand at 2.5% GDP growth in 2015 and 3% in 2016. Others figures include 6.2% unemployment rate in 2015 and 5.9% in 2016, and 2.3% inflation rate in 2015 and 2.6% in 2016. Overall, the shift to increase exportation based on increased demand for resources in Asia is likely to support growth but reduce the input of the resource sector to GDP. As such, focus on growth of the non-resource sector will be vital, to sustain overall economic growth. Tax rates in Australia should remain on a similar level.
- Australia – Economic forecast summary (May 2014). Retrieved from http://www.oecd.org/eco/outlook/australiaeconomicforecastsummary.htm
- Australia’s Economy. Retrieved from The Economist, http://www.economist.com/blogs/graphicdetail/2012/12/focus-3
- Australian Government (The Treasury). Economic outlook. Retrieved from http://www.treasury.gov.au/PublicationsAndMedia/Publications/2013/PEFO-2013/Report/Economic-Outlook
- The World Factbook. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/as.html
- Trading Economics. Retrieved from http://www.tradingeconomics.com/australia/unemployment-rate