Report: Australian GDP and Economic Growth Trends, 2012-2016 Overview

This report provides an analysis of Australia's Gross Domestic Product (GDP) and economic growth trends between 2012 and 2016. It examines the key sectors contributing to Australia's economic growth, including financial services, construction, manufacturing, mining, healthcare, and IT services. The report highlights the impact of the Chinese economy on Australia, particularly through exports and investment. It discusses the role of factors like the floating exchange rate, low interest rates, and the mining boom in stabilizing and fostering growth. Challenges such as structural changes in the economy, the decline in mining investment, and low wage growth are also addressed. A comparison with the USA's GDP is included. The report uses data from the World Bank and other sources to illustrate the trends and provides references to support the analysis.

Running head: ECONOMICS
GDP and Economic growth in Australia last 5 years
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Growth, contributors and challenges of Australian GDP and economic growth, 2012-2016
The Australian economy is one of the most highly developed economies and one of the
biggest mixed economies of the world. The nation has set a record of having 26 years of longest
running economic growth (OECD, 2017). The major contributory sectors in economic growth
are the financial services, construction, manufacturing, mining, healthcare and IT services.
According to World Bank, in 2016, the GDP of Australia at current USD was $1204.62 billion.
Australia was the only country that was not much affected during the global financial crisis of
2008-09 and recorded a positive growth rate of 0.9% in 2009 (Battellino, 2010).
Growth of the Chinese economy has contributed majorly in Australia’s economy. China
is the biggest export market of Australia. During the period of 2005-2015, Australia received
around USD 84 billion of Chinese direct investment (Rahman, Shahbaz & Farooq, 2015). The
floating exchange rate and low interest rate have helped in stabilizing the economy during the
shock of 2008. Moreover, the government had deregulated the banks to operate freely as per the
market situations, and not implement direct controls. Mining boom was another contributor of
GDP and economic growth in Australia. By 2012, mining contributed almost half of the
economic growth and GDP. This has increased the wage level attracting migrated workers
(Downes, Hanslow & Tulip, 2014). Flexible labor market helped to reduce unemployment in the
nation. The growth of tourism has also contributed significantly in the GDP and growth of
Australia.
Ongoing structural change in the economy is the biggest challenge for Australian
economy. There is shift of focus from agriculture, mining and manufacturing to the service
sector, accompanied by change in demand pattern for resources. As the mining boom is almost
over, mining investment has reduced and many mining companies had to reduce their work force

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that increased the unemployment in the economy (Rees, Smith & Hall, 2016). The inflation in
the country is 1.9%, that is, lower than the expected 2%, which keeps the rate of wage growth
low in Australia (Bishop & Cassidy, 2017). From 2012-2016, the GDP of Australia has declined
as shown in figure 1.
Comparison between 1990 and last 5 years GDP of Australia
1990 2012 2013 2014 2015 2016
0.00
200.00
400.00
600.00
800.00
1000.00
1200.00
1400.00
1600.00
1800.00
311.43
1538.19 1567.18
1459.60
1345.38
1204.62
Australia GDP (current US$, billion)
Australia GDP (current US$,
billion)
Figure 1: GDP of Australia, 1990 and 2012-2016
(Source: World Bank, 2018)
In 1990, the GDP of Australia was only 311.43 billion USD, while in 2012, it reached to
$1538.19 billion. The reason of this change is the structural change in the economy, from
agriculture and manufacturing to mining and service sector since the 2000s. With globalization
and trade liberalization, there is rise in FDI, demand as well as production, and international
trade, which contributed in the economic growth.

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Comparison with USA GDP
Although the USA is technologically most powerful nation in the world and has a bigger
economy and population size than Australia, the latter has been able to experience a continuous
economic growth for 26 years. Australian economy is dependent on the service sector, while
USA is dependent on manufacturing, oil production and technological sector (Hanushek &
Woessmann, 2015). The GDP of the USA is much higher than that in Australia, but Australia
was able to dodge the shock of financial crisis, that was started in the USA, due to strong and
flexible economic policies taken by the government.

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References
Battellino, R. (2010). Twenty Years of Economic Growth (Australia, Reserve Bank of Australia).
Retrieved from https://www.rba.gov.au/speeches/2010/sp-dg-200810.html.
Bishop, J., & Cassidy, N. (2017). Insights into Low Wage Growth in Australia. RBA Bulletin,
March, 13-20.
Downes, P. M., Hanslow, K., & Tulip, P. (2014). The effect of the mining boom on the
Australian economy.
Hanushek, E. A., & Woessmann, L. (2015). The knowledge capital of nations: Education and the
economics of growth. MIT Press.
Hatfield-Dodds, S., Schandl, H., Adams, P. D., Baynes, T. M., Brinsmead, T. S., Bryan, B. A., ...
& McCallum, R. (2015). Australia is ‘free to choose’economic growth and falling
environmental pressures. Nature, 527(7576), 49.
OECD. (2017). OECD Economic Surveys Australia [Ebook]. OECD. Retrieved from
https://www.oecd.org/eco/surveys/Australia-2017-OECD-economic-survey-overview.pdf
Rahman, M. M., Shahbaz, M., & Farooq, A. (2015). Financial development, international trade,
and economic growth in Australia: new evidence from multivariate framework
analysis. Journal of Asia-Pacific Business, 16(1), 21-43.
Rees, D. M., Smith, P., & Hall, J. (2016). A Multi‐sector Model of the Australian
Economy. Economic Record, 92(298), 374-408.

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World Bank. (2018). Australia | Data. Retrieved from
https://data.worldbank.org/country/Australia