Australia Economic Profile

Australia Economic & Trade Profile

Australia, with an estimated GDP (current) of US$1.33 trillion is the 13th largest economy of the world. The country ranks 20th in the world with per capita GDP (current) of US$ 51,812. In 2020, Australia’s services and goods industries accounted for 81% and 19% of real gross value added (GVA) respectively. The mining sector generated 11.0% of GVA, followed by financial services (9.4%), ownership of dwellings (9.1%) and healthcare and social assistance (8.0%). Technology-driven sectors – including professional, scientific and technical services, education and IT – are worth over 15% of total economic production. Before the pandemic-induced recession in 2020, Australian economy had been growing consistently for 28 years, a record for uninterrupted growth in the developed economies. Over the last decade (2009-19), Australian economy had posted a consistent annual growth of above 2%.

Australia has an open market with minimal restrictions on import of goods and services, which makes the economy highly productive and dynamic. Australia has FTAs, under bilateral and multilateral arrangements, with New Zealand, Singapore, USA, Thailand, Chile, ASEAN, Malaysia, Korea, Japan, China, Hong Kong, Peru, Brunei Darussalam, Canada, Mexico and Vietnam. An Indonesia-Australia Comprehensive Economic Partnership Agreement has came into force on 5 July 2020. A comprehensive regional Free Trade Agreement (FTA) covering goods, services and investment between Australia, New Zealand and nine Pacific Island countries, named Pacific Agreement on Closer Economic Relations (PACER) Plus, entered into force on 13 December 2020. Australia is currently negotiating FTAs with EU, GCC, UK and India.

Australia remains a significant exporter of natural resources, energy and food items, drawing mainly from its extensive reserves of natural resources i.e., coal, iron, copper, gold, natural gas, uranium, and renewable energy sources and an efficient agricultural production base. Australia’s foreign trade profile is unusual amongst the developed economies – it exports mainly natural resources and agriculture commodities, and imports manufactured goods. Out of the total merchandise exports of US$ 299 billion in FY2020-21 (July-June), the top five items were iron ores and concentrates US$ 111 billion (37.2%), coal US$ 31 billion (10.5%), liquified natural gas US$ 23 billion (7.8%), gold US$ 17 billion (5.7%), copper & concentrates US$ 5.4 billion (1.8%) and wheat & meslin US$ 5.1 billion (1.7%). The agriculture commodities cumulatively contributed US$ 35 billion (11.6%) to the exports. Meat and wheat contributed around 50% to the agriculture exports. The major export destinations were China US$ 109 billion (36.4%), Japan US$ 21 billion (7.1%), South Korea US$ 17 billion (5.6%), USA US$ 13 billion (4.2%), India US$ 10 billion (3.4%), Singapore US$ 9.2 billion (3.1%), UK US$ 8.7 billion (2.9%), and New Zealand US$ 8.0 billion (2.7%).

Out of the total merchandise imports of US$ 231 billion, the major import products were machinery & mechanical appliances US$ 35 billion (15%), passenger motor vehicles US$ 32 billion (14%), electrical machinery & equipment US$ 26 billion (12%), mineral fuels US$ 19 billion (8.4%), and pharmaceutical products US$ 9.1 billion (3.9%). The major import sources were China US$ 64 billion (28%), USA US$ 26 billion (11%), Japan US$ 14 billion (6.2%), Thailand US$ 11 billion (4.7%) and Germany US$ 10.6 billion (4.6%).

In the pre-Covid year i.e., 2019, Australian services exports were AU$ 102 billion (US$ 71 billion), and imports were AU$ 104 billion (US$ 73 billion). Due to the Covid-related restrictions, international trade in services in 2020 remained significantly skewed. In 2020, Australian services exports were AU$ 72 billion (US$ 50 billion), and imports were AU$ 57 billion (US$ 39 billion). Australia’s largest services exports in 2020 were education-related travel services (AU$ 31.7 billion), professional services (AU$ 5.5 billion), Telecom, computer & information services (AU$ 5.2 billion), Personal cultural & recreational services (AU$ 5.1 billion), Personal travel (excl education) services (AU$ 5.1 billion). The major imported services were Personal travel (excl education) services (AU$ 8.6 billion), Professional services (AU$ 8.5 billion), Technical & other business services (AU$ 5.8 billion), Telecom, computer & information services (AU$ 5.6 billion).