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- GDP (PPP):
- $1.1 trillion
- 2.5% growth
- 2.7% 5-year compound annual growth
- $47,389 per capita
- Inflation (CPI):
- FDI Inflow:
Australia, a vibrant free-market democracy, has recorded impressive economic progress unmarred by recession for more than 25 years. In addition to abundant natural resources, the economy has benefited from an effective system of government, a well-functioning legal system, and an independent bureaucracy, all of which have facilitated robust entrepreneurial development.
With almost all industries open to foreign competition and a skilled workforce readily available, Australia continues to be an attractive and dynamic destination for investment. The government has withdrawn from most areas of the market, and competition in such sectors as financial services has increased. Although government debt has been rising since the global financial crisis, it remains substantially lower than in most other advanced economies.
Australia is one of the wealthiest Asia–Pacific nations and has enjoyed more than two decades of economic expansion. It emerged from the 2009 global recession relatively unscathed, but stimulus spending by the previous Labor government generated a fiscal deficit that has continued under subsequent Liberal governments. Australia is internationally competitive in services, technologies, and high-value-added manufactured goods. Mining and agriculture are important sources of exports. Malcolm Turnbull, a former businessman and communications minister, replaced Tony Abbott as head of the ruling Liberal–National coalition and as prime minister in September 2015.
Strong rule of law protects property rights and helps to minimize corruption. Expropriation is highly unusual, and enforcement of contracts is reliable. Australia’s stable political environment supports transparent and well-established political processes, a strong legal system, competent governance, and an independent bureaucracy. The judicial system operates independently and impartially. Anti-corruption measures are generally effective.
The top income tax rate is 45 percent, and the flat corporate tax rate is 30 percent. Other taxes include a value-added tax and a capital gains tax. The overall tax burden equals 27.5 percent of total domestic income. Government spending has amounted to 37 percent of total output (GDP) over the past three years, and budget deficits have averaged 2.8 percent of GDP. Public debt is equivalent to 36.8 percent of GDP.
Australia’s regulatory environment is one of the world’s most transparent and efficient and is highly conducive to entrepreneurship. It takes only three procedures to launch a business. The labor market is well supported by the modern and flexible employment code. The Reserve Bank of Australia has reacted prudently to the slowdown in growth among the country’s trading partners, and inflation remains below target levels.
Trade is moderately important to Australia’s economy; the value of exports and imports taken together equals 41 percent of GDP. The average applied tariff rate is 1.9 percent. Some regulations impede agricultural trade. Most state-owned enterprises have been privatized. Foreign firms compete on equal terms with domestic banks and other financial institutions in Australia’s highly developed and competitive financial system.