Australia is off in its own little world, a nation and also an entire continent. One of the youngest nations in the world, Australia is also one of the most successful.
Australia benefits from rich natural resources, mining and industry, as well as proximity to nations that are quickly growing. Recently, China emerged as a major buyer for the nations’ mineral, energy, and metals production.
A strong export and commodity economy means that Australia has one of the fastest growing economies since the start of the new millennium. Adjusted on a per capita basis, earnings are higher than most other developed nations including the United States, Great Britain, Canada, and others.
Economic Stats
Australia produced just under $1 trillion of goods in 2009, making it an exceptionally strong economy and one of the largest in the world.
Main imports include machinery, electrical equipment, and energy sources like crude oil. Import partners are China, the US, Japan, Singapore, and Germany.
Exports include metals and their derivatives, wool and other agriculture products, refined energy sources, and transport equipment. Export trade partners are Japan, China, South Korea, India, and the United States.
Australian Monetary Policy
The Reserve Bank of Australia is the authority for regulating growth, inflation, and economic certainty. The RBA has a tri-mandate:
Moderate exchange rates
Ensure growth and economic prosperity
Seek to maintain full employment (full employment is an unemployment rate lower than 5 percent)
These goals are met with the low inflation target of 2-3% per year. Moderate inflation is ensured with the Reserve Bank’s ability to move the cash rate, or the rate which banks borrow from the Reserve Bank. Also, the RBA can involve itself in open market operations to buy government debt to drive down interest rates.
Each month, the RBA meets to decide monetary policy.
Economic Indicators and Fundamental Releases
Consumer price index – The CPI records the change in inflation, and is reported by the Reserve Bank of Australia. Keep in mind that the target of 2-3% by the RBA is higher than other developed nations, which typically target 2% on the dot.
Balance of Trade – Australia has a great internal consumption economy, but their natural resources exist in quantities that couldn’t possibly be consumed by Australians alone. In an economy driven by exports, the Balance of Trade number is important for both short- and long-run economic growth and stability.
Employment – The employment report released each month shows the efficacy at which the Australian economy operates. Stronger employment indicates growth, and Australia has found its employment rate to be much higher than other developed world economies for much of the last decade. A reversal of the trend, however, could prove to be damaging to future prospects.
