Australia Rising

Australia has been home to one of the world’s strongest-performing economies in recent years, a trend that is forecast to continue in the years ahead.  Over the past two decades, the Australian economy has expanded by an average of 3.2% per year, well ahead of the 2.4% average GDP growth recorded in the United States or the 1.4% average GDP growth recorded in the European Union over this 20-year period.  Moreover, while most of the world’s developed economies have suffered sharp slowdowns over the past seven years in the wake of the global financial crisis, Australia has managed to continue to record solid growth during this period, with GDP growth in Australia averaging 2.5% since 2009.  This highlights the diversity of the Australian economy and suggests that, even if global growth rates in the future are disappointing, the Australian economy is likely to remain one of the strongest in the world in the coming years.

The current strength of the Australian economy is reflected in the economic growth data for the first quarter of this year, as GDP in Australia grew by a robust 3.1% year-on-year (1.1% quarter-on-quarter) during this period.  Much of this growth was the result of better-than-expected iron ore, coal and natural gas exports in early 2016, despite the fact that Chinese demand for these exports remained relatively weak.  Meanwhile, domestic consumption levels also continued to rise at a healthy pace in the first quarter as consumer demand levels remained strong.  In fact, apart from the manufacturing sector, all sectors of the Australian economy performed well in the first quarter, showcasing the fact that Australia has an economy that is structured in a way that enables it to avoid being over-dependent upon any individual sector for growth.  This has enabled Australia to avoid the downturns that impacted so many other developed economies in recent years. 

Looking ahead, the long-term outlook for the Australian economy remains very positive and growth rates are forecast to exceed those of most other developed economies for the foreseeable future.  On one hand, demand for Australia’s vast reserves of natural resources such as coal, iron ore and natural gas will continue rise, particularly in nearby emerging markets in Asia.  On the other hand, Australia’s demographic situation is one of the most favorable in the developed world and this, combined with some of the world’s highest levels of disposable income, will result in domestic demand levels continuing to rise in Australia, helping to offset any downturns in key export markets.  Finally, Australia enjoys a very strategic, yet relatively secure, location on the map, enabling Australia to enjoy a much higher level of stability and security than most other large economies.   Add to this Australia’s strong economic ties with the United States, China, India and Southeast Asia, and it is clear that Australia is favorably placed to continue its run as one of the world’s best-performing economies in the decades ahead.