AUSTRALIA’S ECONOMY
Agron/Econ 496
Sergio Lence
February, 2008
Australian Economy
Prosperous, Western-style market economy World Bank classification:
Low-income economies 53 countries (e.g., Haiti)
Lower-middle income economies 55 countries (e.g., Guatemala)
Upper-middle income economies 41 countries (e.g., Mexico)
High-income economies 60 countries (e.g., Australia)
Composition of GDP (%)
Australia U.S. Agriculture 3.7 0.9 Industry 25.6 20.6 Services 70.7 78.5
Composition of Exports (%)
Australia U.S. Minerals and Metals 60 ? Rural Goods 17 9 Manufactured Goods 18 82
Australian Economy
Major economic reforms starting in the 1980s First reform: Labor Party’s floating of AUD in 1983 Free-trade agreements and reduction of trade barriers Financial sector deregulation, including 1992 access
for foreign bank branches Rationalization and reduction of trade unions Restructuring of centralized system of industrial
relations and labor bargaining Better integration of individual state economies into
federal system Improvement and standardization of national
infrastructure Privatization (e.g., Australian Wheat Board)
AUSTRALIA:Annual Changes in GDP and CPI
GDP
CPI
Australian Economy
Current concerns Large current account deficit Absence of export-oriented manufacturing
industry Real estate bubble High levels of net foreign debt owed by the
private sector Pressure on environment
POPULATION, 2004
Australia 20 million United States 294 million China 1,300 million India 1,073 million World 6,390 million
World Population Density
Population (bottom) and Internet (top) densities
Australian Population Density
0-100 100-200 200-300 >300
Annual Population Growth,1992-2005 Australia 1.16% per year U.S. 1.12% per year
-0.5
0
0.5
1
1.5
2
Net Immigration Rate,2000-2005 Australia 0.58% of total population U.S. 0.40% of total population
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Foreign-Born Population,circa 2000 Australia 23% U.S. 11%
0
5
10
15
20
25
Nationals (citizens) Non-nationals (non-citizens)
Gross Domestic Product,2005 (billion U.S. dollars, PPP)
Australia 700 U.S. 12,400
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
World Gross Domestic Product (1999)
Earth’s Satellite Picture at Night
Per Capita GDP and GNP,2005 (U.S. dollars, PPP)
Australia 34,200 (GDP) 32,900 (GNP) U.S. 41,800 (GDP) 41,700 (GNP)
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
GDP
GNP
Per Capita GNI and NNI,2005 (U.S. dollars, PPP)
Australia 32,900 (GNI) 27,700 (NNI) U.S. 41,700 (GNI) 36,400 (NNI)
0
10000
20000
30000
40000
50000
60000
Gross national income Net national income
Nominal GDP vs. PPP GNP
Australian Dollar (AUD, A$, AU$)
Currency of the Commonwealth of Australia Includes Australia, Christmas Island, Cocos (Keeling)
Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu.
Introduced in 1966 Not only replacing the Australian pound (distinct from the
pound sterling since 1929) but also introducing a decimal system.
Sixth-most-traded currency in world foreign exchange markets (behind U.S. dollar, euro, yen, pound sterling, and swiss franc) AUD accounts for 4–5% of worldwide foreign exchange
transactions.
Monetary Conversion Rates
AUD per U.S. dollar
0
0.5
1
1.5
2
2.5
Exchange Rate
PPP
Exchange Rate
AUD per U.S. dollar
AUD per US$
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
1/2
/03
4/2
/03
7/2
/03
10
/2/0
3
1/2
/04
4/2
/04
7/2
/04
10
/2/0
4
1/2
/05
4/2
/05
7/2
/05
10
/2/0
5
1/2
/06
4/2
/06
7/2
/06
10
/2/0
6
1/2
/07
4/2
/07
7/2
/07
10
/2/0
7
1/2
/08
Real Annual GDP Growth,1992-2005 Australia 3.8% U.S. 3.2%
0
2
4
6
8
10
Annual Inflation (GDP Deflator),1992-2005 Australia 2.4% U.S. 2.1%
-3
0
3
6
9
12
1553.5
Long-Term Interest Rates,1994-2005
Australia 6.6% U.S. 5.5%
0123456789
10Australia
UnitedStates
Japan
UnitedKingdom
Euroarea
Unemployment Rates, 1994-2005
Australia 6.9% U.S. 5.1%
0
5
10
15
20
Government Net Borrowing-Lending as % of GDP, 2003-2005
Australia 1.6% U.S. -4.4%
-9
-6
-3
0
3
6
9
12
Government Debt as % of GDP
Australia 1.6% U.S. -4.4%
0
20
40
60
80
100
120
140
160
180
1995 2005
Taxes on Income and Profits as % of GDP, 2004 Australia 18.2% U.S. 11.1%
0
5
10
15
20
25
30
Taxes on Goods and Services as % of GDP, 2004
Australia 8.9% U.S. 4.7%
0
5
10
15
20
25
30
Household Expenditures in Recreation and Culture as % of GDP, 2004
Australia 7.1% U.S. 6.4%
0
1
2
3
4
5
6
7
8
9
10
Infant Mortality, 2004
Australia 4.7 deaths per 1000 live births U.S. 6.8 deaths per 1000 live births
0
5
10
15
Life Expectancy at Birth, 2004
Australia 80.6 years U.S. 77.5 years
60
65
70
75
80
85
90
Prison Population Rate, 2004
Australia 120 per 100,000 people U.S. 725 per 100,000 people
0
50
100
150
200
250 725
GINI Index (higher income inequality, higher index)
Australia 35 U.S. 45
Annual Water Consumption per Capita, 2004
Australia 930 m3
U.S. 1,739 m3
0
200
400
600
800
1000
1200
1400
1600
1800
Trade-to-GDP Ratio, 2005
Australia 21% U.S. 13%
0%
20%
40%
60%
80%
100%
120%
140%
AUSTRALIATrade in Goods and Services
-50
0
50
100
150
200
250
1,99
01,
991
1,99
21,
993
1,99
41,
995
1,99
61,
997
1,99
81,
999
2,00
02,
001
2,00
22,
003
2,00
42,
005
2,00
62,
007
Bill
ion
AU
D
Imports
Exports
Trade Balance
AUSTRALIA: Exports
STM: Simply-transformed manufactures ETM: Elaborately-transformed manufactures
AUSTRALIA: Exports
AUSTRALIA: Imports
STM: Simply-transformed manufactures ETM: Elaborately-transformed manufactures
AUSTRALIA: Imports
Destinations of Exports (%)
AUSTRALIA
Japan (20%)
China (12%)
South Korea (8%)
U.S. (6%)
India (6%)
New Zealand (6%)
U.S.
Canada (22%)
Mexico (13%)
Japan (6%)
China (5%)
U.K. (4%)
Germany (4%)
Origins of Imports (%)
AUSTRALIA
China (14%)
U.S. (14%)
Japan (10%)
Singapore (6%)
Germany (5%)
U.S.
Canada (16%)
China (16%)
Mexico (10%)
Japan (8%)
Germany (5%)
Australia: Free Trade Agreements
Free Trade Agreements: U.S. (AUSFTA, started in 2005) Singapore (SAFTA, started in 2003) Thailand (TAFTA, started bin 2005)
Free Trade Agreements under Negotiation/Consideration Japan China ASEAN (Association of South-East Asian Nations)-New
Zealand Chile Gulf Cooperation Council India South Korea Malaysia Indonesia
AUSTRALIABalance of Trade and Current Account
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
% o
f G
DP
TradeBalance
CurrentAccount
AUSTRALIAMajor Ag Policy Developments
Reduction of trade-distorting support schemes for producers
Major reduction in support to dairy producers Implementation of drought-support measures Emphasis in policies encouraging drought-
preparedness amongst farmers More economic-oriented policies for water usage Expansion and strengthening of natural resource and
environmental policies, mainly aimed at preventing soil degradation
Streamlining of sanitary measures for imports
Producer Support Estimatesas % of Gross Farm Receipts
0
10
20
30
40
50
60
70
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Australia Japan United States EU25 OECD Total
AUSTRALIAFarm Support Schemes
Tax arrangements and risk-management tools to manage income fluctuations
Excise tax rebates on diesel used by farmers Accelerated depreciation for land and water-
conservation investments Publicly funded research and development Assistance for exceptional situations (e.g., droughts
and floods) Import tariffs on certain types of cheese,
unprocessed tobacco, and processed fruits and vegetables
Australia Wheat Board
Near-monopoly for Australian wheat exports AWB currently exports 96% of Australian wheat
Created in 1939 Served as model for Canadian Wheat Board
Government-controlled until 1999 Privatized in 1999 (owned by active wheat
growers) Publicly traded in Australian Stock Exchange
since 2001
THE END