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- GDP (PPP):
- $999.6 billion
- 2.4% growth
- 2.5% 5-year compound annual growth
- $43,073 per capita
- Inflation (CPI):
- FDI Inflow:
Australia’s economic freedom score is 81.4, making its economy the 4th freest in the 2015 Index. Its overall score is 0.6 point lower than last year, with gains in monetary freedom and labor freedom outweighed by declines in investment freedom, freedom from corruption, and the control of government spending. Australia is ranked 4th out of 42 countries in the Asia–Pacific region.
Australia’s strong commitment to economic freedom has resulted in a policy framework that has facilitated economic dynamism and resilience. Although overall economic freedom has declined slightly over the past five years, the Australian economy performs remarkably well in many of the 10 economic freedoms. Regulatory efficiency remains firmly institutionalized, and well-established open-market policies sustain flexibility, competitiveness, and large flows of trade and investment. In 2014, Australia became the first developed country to repeal a carbon-emissions tax.
Banking regulations are sensible, and lending practices have been relatively prudent. Monetary stability is well maintained, with inflationary pressures under control. A well-functioning independent judiciary ensures strong protection of property rights, and corruption has been minimal.
Since the early 1980s, successive governments have deregulated financial and labor markets and reduced trade barriers. In September 2013, Liberal Party leader Tony Abbott was elected prime minister following his coalition’s victory in national elections. Australia is one of the Asia–Pacific’s wealthiest nations and has enjoyed more than two decades of economic expansion. Australia emerged from the global recession relatively unscathed, but stimulus spending by the previous Labor government generated a fiscal deficit. Australia is internationally competitive in services, technologies, and high-value-added manufactured goods. Mining and agriculture are important sources of exports.
Australia has a stable political environment with well-established and transparent political processes, a strong legal system, and a professional bureaucracy. Anti-corruption measures are generally effective in discouraging bribery of public officials. Australia’s judicial system operates independently and impartially. Property rights are secure, and enforcement of contracts is reliable. Expropriation is highly unusual.
The top individual income tax rate is 45 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax and a capital gains tax. Total tax revenues equal about 27 percent of the domestic economy. A controversial carbon tax has been repealed. Government expenditures equal 35.7 percent of the economy, and public debt is equivalent to less than 30 percent of GDP.
Start-up companies enjoy great flexibility under licensing and other regulatory frameworks. It takes only one procedure to start a business, and no minimum capital is required. Flexible labor regulations facilitate a dynamic labor market, increasing overall productivity. In 2014, the government lifted price controls on electricity to encourage market-based production of power.
Australia has a 1.8 percent average tariff rate, and non-tariff barriers are low. Large-scale foreign investments are subject to review. In 2013, the government rejected a takeover of Australia’s GrainCorp by the U.S. firm Archer Daniels Midland. The well-developed financial sector offers a wide range of financing instruments. The banking system has remained stable, and all banks are privately owned.