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Australia has been ranked the most resilient economy in the world for five of the past six years.[1] The economy is now in its seventeenth year of uninterrupted growth, the longest boom in its history.
The International Monetary Fund has commended Australia's exemplary economic management and recognised Australia as being at the forefront of international best practice in its annual assessment of the Australian economy. "Sound fiscal, monetary and structural policies have created the conditions for a continuous expansion, supported by high employment levels."[2]
Australia's reputation as a highly competitive economy continues to strengthen. In 2007, the Australian economy was ranked in the top three countries in the Asia Pacific region for its overall competitiveness. Among countries with a population of 20 million or more, Australia ranks third in the world, behind only the United States and Canada.[3]
With forecast economic growth of 3.3% in 2007 and 2008, well above the forecast average of OECD growth rate of 2.7% in both years, Australia will continue to expand more rapidly than most other OECD economies.[4]
While the resource sector is booming, Australia is now predominantly a services-based economy, with services accounting for almost 80% of economic activity.[5]
In AT Kearney’s FDI Confidence Index 2005, Australia remained in the top eight most preferred investment destinations worldwide.
The United Nations Conference on Trade and Development has reinforced Australia's performance with the finding that "Australia is the developed world's third most popular destination for transnational corporations establishing or relocating their headquarters".[6]
In 2006, Australia's net public debt was (-) 4.1% of GDP, compared to the OECD average of 44% (Japan 86%, the US 44% and the UK 40 %).[7]
According to the IMF, "the elimination of net public debt by the Australian government was an impressive milestone that few countries have been able to achieve."[8]
The demand for economic stability and international competitiveness means that sound economic management is foremost on the Australian Government's agenda.
Major reforms to the labour market, business taxation, and competition and protection policy, have delivered an economy well equipped to respond swiftly to global trends and pressures.
The OECD has noted that reforms to the labour market in particular have made Australia more adaptable to changes in the economic environment. The OECD finds that while employment growth tends to, at first, lower average measured productivity growth, this does not mean that higher employment causes the productivity of individual workers to fall. The OECD states that this “… arises because, other things being equal, policy reforms which increase employment can promote job opportunities for low-skilled workers, generate diminishing returns to labour input or expand labour-intensive activities, thereby exerting downward pressure on average measured labour productivity, but pro-employment policies will rather often raise GDP per capita.[9]
There is no doubt that the Australian economy is the perfect platform for investment and business growth. "Australia's financial system is healthy and financial supervision is sound."[10]
"The Australian economy is now in the sixteenth year of uninterrupted expansion, the longest boom it its history. In the last fifteen years wealth has more than doubled, output has increased by nearly two thirds, the capital stock by more than half, labour productivity by a little under half, and the number of jobs by a quarter. The growth of income per person has been faster in Australia over the period than in Canada, the United States, the United Kingdom or New Zealand", Dr. John Edwards, Chief Economist, HSBC Bank for Australia.[11]
View Ten Good Reasons to Invest in Australia summary.
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[1] IMD World Competitiveness Yearbook 2007
[2] International Monetary Fund: Article IV Consultation with Australia, September 2007
[3] IMD, Ibid.
[4] OECD, Economic Outlook 81, May 2007
[5] Australian Bureau of Statistics, Cat. No. 5206.0, June quarter 2007
[6] UNCTAD, World Investment Report 2006
[7] OECD Economic Outlook 81, May 2007
[8] IMF, Ibid.
[9] OECD Employment Outlook, June 2007
[10] IMF, Ibid.
[11] Extract from Quiet Boom: how the long economic upswing is changing Australia and its place in the world, the Lowy Institute, Sydney.
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