Australia flag Australia: Economic outline

Economic Outline

Economic Indicators

The Australian economy experienced 27 years of uninterrupted economic growth. it was the only OECD country that did not enter into recession during the financial crisis of 2007-2008, holding one of the highest growth rates of the developed world. After growing by 3.7% in 2022, the Australian economy's growth stayed below its usual pace in 2023 (+1.8%) due to persistent cost-of-living pressures and increased interest rates, which dampened demand. The main drivers of growth were elevated net migration, resilient private investment, and strong public investment in transport, health, education, and national defence. Economic activity is forecasted to continue slowing down in the short term; consequently, growth is anticipated to decrease to approximately 1.2% in 2024 before it picks up to 2% the following year (IMF).

Monetary policy has significantly tightened in 2023, marked by a cumulative increase of 400 basis points in interest rates since early 2022. Additionally, the fiscal deficit has shrunk more rapidly compared to other advanced economies, standing at 1.6% of GDP in 2023, largely owing to a spike in tax receipts from businesses and households. Nevertheless, the IMF expects it to widen to 2.3% this year. While the anticipation of increased debt servicing is likely to drive up spending during the 2023-2024 financial year, tax reforms - especially the planned reduction in income tax set to take effect in July 2024 - will partially counterbalance this rise. Consequently, this gradual fiscal consolidation is expected to stabilize the government debt ratio over the medium term. Moreover, the proportion of Australian public debt held by non-residents, currently around 45%, has been decreasing since 2020. Overall, the debt-to-GDP ratio was estimated at 51.9% in 2023. Headline inflation dropped to 5.8% in 2023, down from its peak of 7.8% in Q4 2022, surpassing the Reserve Bank of Australia’s (RBA) target range of 2-3%. Services inflation persists despite a reduction in global supply chain pressures and a domestic demand slowdown due to tighter monetary policy, which have contributed to a decline in goods inflation. Despite recent moderation, services inflation remains elevated and widespread, fueled by robust demand, increased input costs from both labour and non-labor factors like rent and electricity, and supply constraints. The IMF expects inflation to decrease gradually over the forecast horizon, to 3.4% in 2025.

The short-term projection for employment growth has been adjusted upwards by the Reserve Bank of Australia due to the improved forecast for domestic activity and the expectation of stronger growth in the working-age population in the coming year. Employment is anticipated to continue expanding over the next few years, and a significant portion of the labour market adjustment to below-trend economic growth is anticipated to happen through a reduction in average hours worked. During 2023, unemployment averaged 3.7%, in line with the previous year, although it is seen to rise to 4.3% in 2024. In general, Australians enjoy a high standard of living, with GDP per capita (PPP) estimated at USD 64,675 in 2023 by the IMF. Nevertheless, according to the Council of Social Services’ “2022 Poverty in Australia Snapshot”, 3.3 million people (13.4% of the population) live below the poverty line of 50% of median income, including 761,000 children (16.6%).

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 1,724.921,741.881,790.351,863.241,940.48
GDP (Constant Prices, Annual % Change)
GDP per Capita (USD) 65,57565,43466,58968,61470,751
General Government Balance (in % of GDP) -2.3-1.1-1.5-1.5-1.1
General Government Gross Debt (in % of GDP) 50.149.449.649.348.8
Inflation Rate (%)
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) 18.3221.238.61-3.79-10.25
Current Account (in % of GDP)

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
Australian Dollar (AUD) - Average Annual Exchange Rate For 1 GBP 1.821.681.791.751.91

Source: World Bank, 2015


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Latest Update: July 2024