- GDP (PPP):
- $1.2 trillion
- 2.3% growth
- 2.4% 5-year compound annual growth
- $50,334 per capita
- Inflation (CPI):
- FDI Inflow:
Australia’s economic freedom score is 80.9, making its economy the 5th freest in the 2019 Index. Its overall score is unchanged from 2018, with higher scores for labor freedom, government integrity, fiscal health, and trade freedom offsetting a steep drop in judicial effectiveness. Australia is ranked 4th among 43 countries in the Asia–Pacific region, and its overall score is well above the regional and world averages.
The Australian economy is undergoing structural change as the mining investment boom unwinds, having peaked in 2012. The government is supporting this transition through corporate tax cuts, negotiation of additional free-trade agreements, and further reforms in the labor market. Overall, Australia’s robust free-market democracy has benefited from an effective system of government that facilitates vibrant entrepreneurial development. With almost all industries open to foreign competition and a skilled workforce readily available, Australia remains an attractive and dynamic destination for investment.
Australia is one of the wealthiest Asia–Pacific nations and has enjoyed more than two decades of economic expansion. In a reflection of the turmoil within the governing party, Scott Morrison replaced Malcolm Turnbull as head of the ruling Liberal–National coalition and prime minister in 2018. Turnbull had replaced former Prime Minister Tony Abbott in 2015. Australia is internationally competitive in financial and insurance services, technologies, and high-value-added manufactured goods. Mining and agriculture are important export sectors. Australia’s 10 free-trade agreements include agreements with the U.S., China, Japan, South Korea, and ASEAN. Negotiations on similar agreements are ongoing with the European Union and are expected to begin with the United Kingdom following Britain’s exit from the EU.
Property rights are robustly protected, and the strong rule of law mitigates corruption. Expropriation is highly unusual, and enforcement of contracts is reliable. Australia has transparent and well-established political processes, a strong legal system, competent governance, and an independent bureaucracy. The judicial system operates independently and impartially. Anticorruption measures are generally effective, and corruption cases are rare.
The top income tax rate is 45 percent, and the flat corporate tax rate is 30 percent. Other taxes include value-added and capital gains taxes. The overall tax burden equals 28.2 percent of total domestic income. Over the past three years, government spending has amounted to 36.5 percent of the country’s output (GDP), and budget deficits have averaged 2.5 percent of GDP. Public debt is equivalent to 41.6 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 government plans to eliminate subsidies for wind and solar energy generators by 2020.
The combined value of exports and imports is equal to 41.9 percent of GDP. The average applied tariff rate is 1.2 percent. As of June 30, 2018, according to the WTO, Australia had 322 nontariff measures in force. Government policies do not significantly interfere with foreign investment. Foreign firms compete on equal terms with domestic banks and other financial institutions in Australia’s highly developed and competitive financial system.