Australia
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Australia is the 13th largest economy in the world globally, with a nominal gross domestic product (GDP) of approximately $1.8 trillion in 2024. The nation experienced nearly 30 years of uninterrupted GDP growth, a streak that concluded with a recession in the second quarter of 2020 due to the Covid-19 pandemic.
According to the International Monetary Fund (IMF), Australia’s economy rebounded strongly from the pandemic-induced recession, aided by unprecedented macroeconomic policy stimulus and effective virus suppression measures in 2020.
The country recorded a GDP growth of 4.9% in 2021, followed by 3.7% in 2022. However, growth decelerated to 1.9% in 2023. The IMF projects a further slowdown, with growth rates of 1.2% in 2024 and an improvement to 2.1% in 2025.
Australia GDP Annual Growth Rate (in %)
As of March 2024, Australia’s population reached approximately 27.1 million, marking a 2.3% increase from the previous year. Urbanization remains high, with 86.6% of the population residing in urban areas.
Net overseas migration continues to be a significant contributor to population growth, with a net gain of 509,754 people in the 12 months leading up to March 2024, setting a new record for the same period.
In 2023, Australia’s unemployment rate declined to 3.67% from 3.70% in 2022. Projections indicate a gradual increase in unemployment, reaching approximately 4.5% by mid-2025. Further forecasts suggest the rate will rise to around 4.55% by 2028.
Australia Unemployment rate
Currency and Central Bank
The Australian dollar (AUD) is the official currency of Australia and its external territories, including Christmas Island, the Cocos (Keeling) Islands, and Norfolk Island. Domestically, the dollar sign ($) is commonly used, with the prefixes A$ or AU$ employed internationally to distinguish it from other dollar-denominated currencies.
The AUD is the sixth most traded currency globally, as per the latest Bank for International Settlements (BIS) survey from 2022.
The Reserve Bank of Australia (RBA) serves as the nation’s central bank since its establishment on January 14, 1960, following the enactment of the Reserve Bank Act of 1959. Prior to this, the Commonwealth Bank of Australia performed central banking functions.
Australia Inflation (in %)
In terms of inflation, Australia saw a rate of 6.5% in 2022, which decreased to 4.8% in 2023. The IMF forecasts a continued decline, with inflation reaching 3.3% in 2024 and 2025.
Industry and Trade
Viewed historically, the Australian economy was known as heavily dependent on agriculture, particularly wheat, beef, lamb, dairy produce, and several irrigated crops. Following World War II, its manufacturing and services sectors began growing as mineral exploitation in the country developed. Australia started undergoing economic liberalization in the early 1980s.
Australia’s economy is now dominated by its service sector, which contributes 75% to GDP. The mining sector accounts for 10%, with significant contributions from manufacturing (6%) and agriculture (2%). Key industries include food production, machinery and equipment, metal processing, chemicals, petrochemicals, and building materials.
Agriculture and mining remain critical for exports, with iron ore, coal, meat, and cereals being prominent export products. Australia’s main export partners are China, Japan, South Korea, and the United States, while its top imports include machinery, vehicles, and pharmaceuticals from countries such as China, the US, Japan, and Germany.
Australia Economy: Balance of Trade
Stock Exchanges and Capital Markets
Australia’s primary securities exchange is the Australian Securities Exchange (ASX), formed in July 2006 through the merger of the Australian Stock Exchange and the Sydney Futures Exchange. The ASX offers a diverse range of asset classes and services, including equities, debt securities, derivatives, and commodities.
The S&P/ASX 200 index, maintained by Standard & Poor’s, is a market-capitalization-weighted and float-adjusted index considered the benchmark of the ASX. As of October 10, 2024, the largest companies in the index by market capitalization include the Commonwealth Bank of Australia (approx. AU$228 bn), BHP Group Limited (approx. AU$216 bn) and CSL Limited (approx. AU$142 bn). These companies represent key sectors in the Australian economy, including finance, mining, and biotechnology.
Bond Market
Australia’s bond market is well-developed, encompassing government, semi-government, and corporate bonds. The government issues various debt instruments, including Treasury Bonds, Treasury Indexed Bonds, and short-term Treasury Notes with maturities typically less than six months, all denominated in Australian dollars.
The corporate bond market features debt securities from financial institutions, non-financial corporations, asset-backed securities, and “Kangaroo” bonds—issued by non-residents in the Australian domestic market and denominated in AUD.
Notably, Australia’s non-government bond market is significantly larger than its government bond market. As of June 2024, the total outstanding value of debt securities issued by the Australian government amounted to almost AU$907 bn.
In the fiscal year 2024-25, the Australian Office of Financial Management (AOFM) plans to issue around AU$95 bn in Treasury Bonds, with AU$46.4 bn already completed by December 2024.
The semi-government bond market, comprising state and territory government issuances, is approximately 60% the size of the Australian Government Securities (AGS) market.
In 2024, the Australian dollar primary market experienced a record start, with AU$61.1 bn raised by financial institutions and AU$7.9 bn by corporates, marking increases of around 20% and 85%, respectively, compared to the same period in 2023.
Real Estate Market
Housing affordability remains a critical issue in Australia. In early 2002, the median house price was 4.9 times the median gross disposable household income; by early 2024, this ratio had increased to 8.6 times, indicating a significant decline in affordability over the past two decades.
The PropTrack Housing Affordability Report for 2023-2024 highlights that a median-income household earning $112,000 could afford only 14% of homes sold during this period, a sharp decline from 43% three years prior. This situation is particularly severe in Tasmania, New South Wales, and Victoria, where such households can afford only 9%, 10%, and 12% of homes, respectively.
Australia House Price Index (in %)
In the rental market, 2023 witnessed the longest continuous stretch of rising advertised rents and the highest rents on record, making it increasingly difficult for low-income households to secure affordable housing.
Despite these challenges, the Australian housing market has experienced substantial growth in 2023. Both house and unit prices exhibited consistent growth throughout the year. Recent data from PropTrack reveals a national annual growth rate in house and unit prices of 5.42%, with capital cities experiencing a slightly higher rate at 6.54%.
The federal government has acknowledged the housing affordability crisis and, in its 2024 budget, announced plans to address the issue through various measures, including increasing housing supply and providing support for first-time homebuyers.
This article was written with the assistance of AI. A human editor reviewed and refined the text for accuracy and quality before publication.
Sources of Charts: tradingeconomics.com
