The Great Australian Saga of
Uninterrupted Economic Growth

Australia has been experiencing 16 years of uninterrupted economic growth. The country'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, and among the countries with population of 20 million or more Australia ranks third, behind only the United States and Canada.
In terms of economic activity across the OECD more broadly, the Economic Outlook forecasts that the growth will continue to expand strongly in 2007 and 2008, underpinned by strong job creation and falling unemployment, ongoing buoyancy in emerging market economies and favourable financial conditions.
The positive outlook is supported by solid growth in the Euro area and Japan. Although economic activity in the US is projected to moderate in 2007 due to the weak housing market, growth is expected to gradually regain momentum during 2008. Outside of the OECD, China is forecast to continue its strong expansion, supported by accelerating domestic demand and robust export growth.
The International Monetary Fund has recently commended the Australian government on its sound macroeconomic management and continuing structural reform efforts that have underpinned the sustained strong economic performance. "Looking ahead, macroeconomic policies are well positioned to face potential external shocks".
Australia's economy is ranked the 7th most resilient in the world and second in the region. 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.
While the resource sector is booming, Australia is now predominantly a services-based economy, with services accounting for almost 80% of economic activity.
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".
In 2006, Australia's net public debt was (-) 4.1 percent of GDP, compared to the OECD average of 44 percent (Japan 86 percent, the US 44 percent and the UK 40). According to IMF, "the elimination of net public debt by the Australian government was an impressive milestone that few countries have been able to achieve.”
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 initially 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. High productivity and export growth have been hallmarks of the Australian economy over the past decade across a diverse industry base. 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.”
"The Australian economy is now in the sixteenth year of uninterrupted expansion, the longest boom it its history. In the last 15 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.