From the point of view of GDP, Australia is now the fourteenth largest economy in the world, with $889 billion in 2007. The positive reforms the country has experienced over the last twenty years have boosted it economically, raising the living standards. In the 1980’s Australia went through a recession. With the help of strict government policies and growing demand for commodities, this recession was followed by 16 years of continuous growth.
The largest sector in Australia is the services sector, which, in 2007, comprised seventy two per cent of GDP. The country takes great profit from the current commodities demand. Australia exports iron, coal, copper, lead, natural gas, diamonds, silver, gold, bauxite, uranium, mineral sands, opals, zinc, meat, grain and wool. The mining and agricultural sectors combined contribute 65% of exports, although they are rather small sectors. In 2007 alone, Australia exported AU $216 billion of goods and services and imported AU $228 billion, according to the CIA World Factbook. Australia has the US, Japan and China as main import and export partners.
Australia has an advantageous trade balance. In spite of that, it has an account deficit of 5.8%. According to the International Monetary Fund, this current deficit will continue until 2012. Like in most parts of the world, inflation is rising in Australia too. At the end of 2007, it stood at 4.2%. It will probably continue to be above the target of 2%-3%, which had been set by the Bank of Australia. This has to with the relation between large interest payments and foreign debt.
Australia currently relies on Asia for its economic stability and well-being, although it has old ties with the US and with Europe. Japan is it’s partner for capital financing, especially in the field of mining. China is the main partner of export. Since the mid nineties, Australia’s exports have increased with over 50%, from $93 billion to $154 billion, according to the Australian Bureau of Statistics. More than 250,000 jobs have been created due to exports.
Recently there has been some instability in the manufacturing sector. The sector quickly recovered in 2007, contributing to the country’s GDP almost 10%. The development of Australian economy has been helped mostly with the support of the government, which carried economic reforms. The country’s economy is expected to keep growing at least five years from now, raising the Australia economy and Australia’s standard of living even more.
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