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June 12th, 2010 |

Author: Gavin

Economy of Australia

Australia Economy

Australia has a huge foreign and private sector department. Australia’s expanding resource sector might be one of the country’s weak points. The manufacturing sector has been shrinking in a rapid pace. The associate professor of Economics at the University of New South Wales, Peter Kriesler, thinks that the country depends more and more on the key resource exports. Australia is reliant on what is happening in countries like India and China.

The Australian Government carried out economic reforms in order to boost the country’s economy. The government companies have been privatized and the financial services have been opened, the labor markets becoming more flexible.

The International Monetary Fund considers that Australia’s current deficit will be present up to at least 2012. Like it has happened in the rest of the world, the inflation level is also growing in Australia. In 2007 it was at 4.2%. It will probably continue to be above the target of 2 or 3 per cent which had been previously set by the Bank of Australia.

Australia’s economic growth is higher than other countries in the West and this growth is based mostly on the mining sector. Attempts to reduce inflation are unequally directed at wage earners and the poor, as asset owners can take profit from the interest payments on their savings which are higher. Low income earners have more debt than they had before due to the explosion of the domestic financial sector. High interest rates would cause low income earners to suffer the most.

The largest economic sector in Australia is the services sector, which accounts for more than 70 percent of Gross Domestic Product, according to the 2007 data. Australia has rich natural resources. Since the European settlement, Australia has been cultivating grain crops. It is a big exporter of agricultural products like wheat, wool, gold, iron, coal and natural gas, sugarcane, tobacco, apples, potatoes, tomatoes, pineapples, bananas and mangoes. The country exports sugar to the United States, Malaysia, Singapore, Canada, China and Japan. Agriculture and services related to agriculture employ 400,000 people. 3 per cent of Australia’s Gross Domestic Product comes from agriculture.

Australian farmers are often affected by drought because of the El Niño-Southern Oscillation. The country has very good water resource management, maintaining productivity in agriculture. Recently, scientists at the Australian Centre for Plant Functional Genomics have been researching drought tolerant crops.

Further reading on EconomyWatch.com:

Overvierw of Australian Economy

Exports and Imports of Australia

Economic Indicators of Australia

About the Author

I have studied economics for years and love to write about economic trends and conditions.