In the past two decades, the Australian economy has been, and continues to be a very strong and steady economy because of steady GDP growth rates, with an average around 3.5% annually (Heritage.org). Australia has also benefitted from considerably low inflation and unemployment rates. Because of these macroeconomic values, Australia is ranked third in the ranking of regional economies (Heritage.org). The reasons for Australia’s ongoing success is mainly because of the boom in foreign demand of importing the plethora of natural resources and minerals the country contains, combined with the structural economic policies enacted in the 1980’s (The Economist - Australia’s Economy). Australia is also one of the few countries in the world that was essentially unaffected by the Great Recession during 2008 and 2009, because of the intuitive financial stimulus decision made by Australia’s policymakers after predicting economic collapse only five months before the recession’s conception (Barrett 9). Because of Australia’s economic success and ability to dodge the effects of the financial crisis of 2008, its currency, the AUD, or Australian Dollar, has driven the exchange rate to American dollars to around 1 AUD = $1.05 USD (The Economist). Recently however, the Australian economy is beginning to slow down due to China’s decrease in demand of Australia’s resources gained from mining operations, such as iron ore and coal (The Wall Street Journal), driving the AUD down to $0.90 USD (Bloomberg).
Strengths of Economy:
Australia’s main component of its economy is its exportation of natural resources, such as coal, iron ore, gold, nickel, and uranium. Australia is a natural mineral resource leader today in the world because of the discoveries of new geological mineral deposits made in the past 50 years. Australia took advantage of this, earning its spots as the world’s largest refiner of bauxite (unrefined aluminum), and the biggest producer of industrial diamonds and lead. The country also exports more black coal than any other nation (History of the Minerals Industry).
The largest slice of Australia’s exports go to China, exporting around 31.6% of its total exports, making China Australia’s biggest benefactor to its economy (DFAT). Although the exports mainly consist of the titanic amount of minerals that Australia mines, China also imports large quantities of wool, another heavily traded commodity of Australia. One of the leading wool industries, the Australian Wool Innovation (AWI) has said “it is easier to sell fine wool for clothes to China than to traditional recession-hit markets in Europe” (The Economist - Hitched to the China Wagon).
The exportation of wool in conjunction with the exportation of minerals and ore to China makes China a strong partner with Australia when it comes to resource trading. China obviously is dependent on Australia’s exportations, making Australia’s relations with China a strength of the overall...