Economy of Australia

Globalization has largely benefited the Australian economy. Australia has an abundance of natural resources that their population of 23 million people can’t use, so they sell the surplus to other countries that have a demand for the resources, giving Australia a world market of over 6. 5 billion people. The Australian economy has experienced continuous growth and low unemployment, contained inflation, very low public debt, and a strong and stable financial system. By 2012, Australia had experienced more than 20 years of continued economic growth, averaging 3. 5% a year.

Demand for resources and energy from Asia and especially China has grown rapidly, creating resource investments and growth in commodity exports. The high Australian dollar has hurt the manufacturing sector, while the services sector is the largest part of the Australian economy, accounting for 68% of GDP and 75% of jobs. Australia was comparatively unaffected by the global financial crisis as the banking system has remained strong and inflation is under control. Australia has benefited from a dramatic surge in its terms of trade in recent years, stemming from rising global commodity prices.

Australia is a large exporter of natural resources, energy, and food. Australia’s abundant natural resources attract high levels of foreign investment and include extensive reserves of coal, iron, copper, gold, natural gas, uranium, and renewable energy sources. Australia is an open market with minimal restrictions on imports of goods and services. The process of opening up has increased productivity, stimulated growth, and made the economy more flexible and dynamic. Australia ranked the 19th largest importer and 19th largest exporter. In 2011 the Australian economy was the fastest growing advanced economy in the world.

The Australian economy is dominated by its service sector, representing 68% of GDP. The mining sector represents 10% of GDP; the “mining-related economy” represents 9% of GDP, with the total mining sector represents 19% of GDP, according to an article by the Sydney Morning Herald. As a result, economic growth and business in Australia is largely dependent on the mining sector, according to BBC News.

Australia was affected by the global financial crisis; but not to the same extent as other countries, due to certain factors, such as: high demand from China, stimulus measures by the then Rudd Government, and a buffer of surplus created during the previous Howard Government. Despite high global demand for Australian mineral commodities, export growth has remained flat in comparison to strong import growth. Even though Australia enjoys high commodity prices, economists have warned that structural change is needed in order to increase the size of manufacturing sector. Australia’s main exports have come from their primary industry, raw materials, such as minerals and produce.

Their primary industry accounts for approximately 50 percent of their exports and includes coal, uranium, and iron ore as well as other minerals, such as wheat and rice; and meat and animal products, like beef and wool, as you can see in map on the next page. The other 50 percent of their exports are secondary goods and tertiary services. Secondary goods are those that have been processed or manufactured, such as machinery and food products, while tertiary exports are services, including education and tourism. In the past, Australia traded with the United Kingdom and Europe because they had ties to the British Empire.

In recent times, Australia’s trading partners have expanded so they now rely on trade with Asia and the USA, while exports to the UK and Europe have decreased in comparison. China is their biggest single export market, followed by Japan. China’s entry into the global marketplace has changed the composition of the market, however, due to the size of Australia’s population compared to the rest of the world. Australia imports a number of primary, secondary and tertiary products and services. Crude petroleum makes up the bulk of the primary imports, while computers and cars make up the majority of the secondary goods they import.

Most of their tertiary imports are travel-related, including travel, transportation and insurance. Importation has negatively affected some local industries. The hardest hit industries are secondary, such as manufacturing, because the cost of labor in Australia is high due to their higher standard of living compared to other countries. Footwear manufacturer Blundstone, for example, which has been based in Tasmania since the 1870s, announced in early 2007 that manufacturing would be moved to parts of Asia in order to cut production costs.

Other industries can be affected by uncontrollable events; for example, drought will affect a crop yield or a herd population in the agricultural sector. As a country with a stable government and substantial revenue, globalization, in many ways, has been positive for Australia. Australia has not fallen into the cycle of debt that many developing nations have suffered, and it hasn’t been adversely affected by bad investments that fuelled the collapse of the Asian economy in the late 1990s. Australia’s strong economy strengthened during the time when globalization was taking off at a technological level.