A highly developed country, Australia is the world’s 13th-largest economy and has the world’s fifth-highest per capita income. With a nominal GDP of $1.507 trillion, and a GDP per capita of $66,984, as estimated by the IMF in 2011. Australia’s military expenditure is the world’s 13th-largest. With the second-highest human development index globally, Australia ranks highly in many international comparisons of national performance, such as quality of life, health, education, economic freedom, and the protection of civil liberties and political rights, according to World Audit. So far, it sounds like business in Australia is pretty strong at the moment, but let’s take a look at all of the facts first.
Australia’s Economy and How It Affects Business
Ranked third in the Index of Economic Freedom for 2010, the country was also ranked second in the United Nations 2011 Human Development Index and first in Legatum’s 2008 Prosperity Index. An emphasis on exporting commodities rather than manufactured goods has underpinned a significant increase in Australia’s terms of trade since the start of the 21st century, due to rising commodity prices. Australia has grown at an average annual rate of 3.6 % for over 15 years, in comparison to the OECD annual average of 2.5 % according to a report by the Economist. Rich in natural resources, Australia is a major exporter of agricultural products, particularly wheat and wool, minerals such as iron-ore and gold, and energy in the forms of liquified natural gas and coal. Although agriculture and natural resources account for only 3 per cent and 5 per cent of GDP respectively, they contribute substantially to export performance. Australia’s largest export markets are Japan, China, the US, South Korea, and New Zealand, according to the Australian Bureau of Statistics. Australia is the world’s fourth largest exporter of wine, in an industry contributing $5.5 billion per annum to the nation’s economy.
Import and Export Business in Australia
Australia was also ranked the 19th largest importer and 19th largest exporter. In 2011 the Australian economy was the fastest growing advanced economy in the world. The Australian economy is dominated by its service sector, representing 68% of GDP. The mining sector represents 10% of GDP; the “mining-related economy” represents 9% of GDP , with the total mining sector represents 19% of GDP, according to an article by the Sydney Morning Herald. As a result, economic growth and business in Australia is largely dependent on the mining sector, according to BBC News. Australia was affected by the global financial crisis; but not to the same extent as other countries, due to certain factors, such as: high demand from China, stimulus measures by the then Rudd Government, and a buffer of surplus created during the previous Howard Government. Despite high global demand for Australian mineral commodities, export growth has remained flat in comparison to strong import growth. Even though Australia enjoys high commodity prices, economists have warned that structural change is needed in order to increase the size of manufacturing sector.
Overall, business in Australia is going well and Australia is a great market to do business in. While the market may be somewhat small at 22,864,922, according to government statistics, it is quite rich with a GDP per capita higher than the United States. Australia was also ranked as the 15th Easiest Country to do Business In by the World Bank for 2012. In the same indicator, Australia was ranked at 65th for Protecting Investors, 30th for Trading Across Borders, and 17th for Enforcing Contracts. So the business climate is quite friendly in Australia. While the economy has become somewhat dependent on mining, their are increasing signals that the government is trying to diversify away from this. In addition, Australia’s population is growing much faster than other advanced countries, due to a heavy amount of immigration. So overall, their are plenty of opportunities in Australia.