Business

Australia has a strong economy despite its vulnerability to fluctuating world commodity prices and variations in agricultural output due to drought or other causes. The economy was built on farming and mining initially. During World War II manufacturing boomed due to Australia's geographical isolation. In recent years service industries have come to the fore accounting for 70% of the GDP since 2000. Australians enjoy a high standard of living with a per capita GDP of (US) $27,000 which currently growing at 3.8% a year.

Australia has an enviable Western-style capitalist economy with a per capita GDP on par with the four dominant West European economies. Rising output in the domestic economy, robust business and consumer confidence, and rising exports of raw materials and agricultural products are fuelling the economy. Australia's emphasis on reforms, low inflation, and growing ties with China are other key factors behind the economy's strength.

The impact of drought, weak foreign demand, and strong import demand pushed the trade deficit up from $8 billion in 2002, to $18 billion in 2003, $13 billion in 2004, and nearly $17 billion in 2005. Housing prices probably peaked in 2005, diminishing the prospect that interest rates would be raised to prevent a speculative bubble. Conservative fiscal policies have kept Australia's budget in surplus from 2002 to 2005.

The export of manufactured goods accounts for 30% of exports with goods and services accounting for another 20%. Tourism makes a very significant contribution to Australia's balance of payments. In 2003 the country hosted almost 4.5 million visitors. The country's main exports are minerals (aluminium, coal, gold, iron), machinery, cereals, meat and wool.