With a GDP (Gross Domestic Product) of over $750 billion (in 2006) Australia’s economy can be classified as a relatively small one. However, on a per capita basis the country can be compared to most of the industrialized Western European countries in terms of economic development.
Its economy is characterized as service oriented since a big portion of its GDP comes from this sector, especially from the business services, finance and property. On the other hand, Australia’s heavy manufacturing dominates its exporting activities, which leads to a trade deficit. The biggest portion of the manufacturing activities is contributed by rural and miner exports. This leads to the economy’s sensitivity to a movement in the prices of commodity items.
The biggest portion of the exports of Australia goes to Japan and ASEAN (Association of Southeast Asian Nations). The latter represents a coalition between Indonesia, Malaysia, Brunei, Laos, Cambodia, Singapore, Thailand, Vietnam, Philippines and Myanmar. This results in sensitivity toward the economic conditions that are experienced within this region.
Nevertheless, the Asian crisis was not negatively felt, because the Australian economy reached a growth of 4.7% on average annually. This seemed as a paradox having in mind that Asia represents one of the major destinations of the country’s exports.
The reason attributed to the experienced growth concerns the steady domestic consumer consumption, which has contributed to the stability during these turbulent times. This stable domestic consumer consumption helped the economy on several other occasions in the past to overcome such unfavorable economic conditions. This leads to the conclusion that you should carefully observe the consumer consumption indicator as a gauge of the economy’s performance especially during unfavorable economic times.
Consumer consumption indicators should also be observed so that a potential global slowdown and its consequent negative effects can be recognized on the Australian economy.