Australia flag Australia: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The Australian economy experienced 26 years of uninterrupted economic growth. it was the only OECD country that did not enter into recession during the financial crisis of 2007-2008, holding one of the highest growth rates of the developed world. In 2022, Australia is the world’s 13th largest economy. Under the global effect of the COVID pandemic, it’s GDP growth amounted to -2.4% in 2020, down from 1.9% a year earlier but bounced back in 2021 at 3.5%. The economy continues to be driven by business and government spending, while households and the consumer sector struggle amid low wages growth (generally, consumer spending represents almost 60% of the economy). The country also benefits from large-scale exports of agricultural products and a vigorous financial sector. According to the IMF's October 2021 forecast, GDP growth is expected to pick up to 4.1% in 2022 and then to reach 2.6% in 2023, subject to the post-pandemic global economic recovery. A risk is that the recovery in business and consumer sentiment is hampered by a rise in business insolvencies and renewed labour market weakness as policy support was scaled back in 2021. The economic recovery has been uneven due to differences in the impact of voluntary and imposed confinement across regions, industries and firms. Continued international border restrictions have hampered the recovery in education and tourism exports (OECD, 2022).

In 2021, the inflation rate in Australia was 2.5%, a rate that is expected to stabilise above pre-pandemic levels of 1.6% in 2019, at 2.1% in 2022 and 2.2% in 2023, according to the latest World Economic Outlook from the IMF. Due to the COVID-19 crisis, the current government budget balance showed a large deficit in 2020 (-7.9 % of GDP) and 2021 (8.1%), which is expected to recover to -5.8% in 2022 and -3.8% in 2023. IMF evaluated the 2021 government debt at 62.1% of GDP, expecting it to reach 66.4% and 67.2% in 2022 and 2023 respectively. Private consumption should continue to decrease as households become more cautious. Some support is coming from fiscal policy in the form of infrastructure spending, tax breaks and social transfers, and from a still accommodating monetary policy. Investment is also set to get some traction, benefiting from still ample corporate profits, favourable taxation and higher demand for infrastructure and services. A risk is that the recovery in business and consumer sentiment is hampered by a rise in business insolvencies and renewed labour market weakness as policy support is scaled back in 2021.  Services exports in particular (tourism and education) are expected to regain momentum in a post-COVID world, helped by a renewed demand from Asia-Pacific neighbours. The Government is seeking to increase national appeal relative to its Asian competition in international trade. At the same time, to boost the economy, Australia is increasing its economic integration with the Asia-Pacific region and Europe, with which it has signed trade agreements while maintaining preferential relations with the United States. 2021 was a year of increasingly tense relationship with China, Australia's biggest trading partner.

In 2022, the country’s most immediate challenge remains related to the economic, social and public health impacts of the COVID-19 pandemic. The unemployment rate was quite low until the pandemic (5.2%) but picked at 6.5% in 2020 before coming back to 5.2%. According to the Australian Bureau of Statistics (ABS), approximately 636 700 Australians were unemployed in November 2021, a decreasing number. The ABS also reported that underemployment - defined as people who want to work more - had also decreased to 7.5%. The IMF expects the unemployment rate to decrease to 4.8% in 2022 and 4.7% in 2023. Moreover, Australia must face an ageing population and climate change impacts, such as the loss of 20% of the Great Coral Reef's coral due to a catastrophic bleaching situation, catastrophic bushfire - during the 2019-2020 fire season over 17 million hectares had been burned across the country - and the increasing frequency and duration of droughts putting an unprecedented level of water stress on the Australian agriculture. The country is also one of the largest Co2 polluters per capita in the world.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 1,392.331,359.37e1,610.561,677.451,772.05
GDP (Constant Prices, Annual % Change) 1.9-2.4e4.24.12.5
GDP per Capita (USD) 54,477e52,905e62,61964,89567,842
General Government Balance (in % of GDP) -4.1-7.9e-8.1-5.8-3.8
General Government Gross Debt (in % of GDP) 46.657.3e62.166.467.2
Inflation Rate (%) 1.60.9e2.83.92.7
Unemployment Rate (% of the Labour Force) 5.26.5e5.24.84.7
Current Account (billions USD) 9.8536.2157.2922.219.25
Current Account (in % of GDP) 0.72.73.61.30.5

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Australian Dollar (AUD) - Average Annual Exchange Rate For 1 ZAR 0.090.100.100.100.09

Source: World Bank, 2015

 

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Latest Update: June 2022