The Australian economy is currently in its 28th year of consecutive economic growth.1 The economy has long been characterized by a stable growth trajectory arising from a robust financial services sector, macroeconomic policy, structural reforms and a prolonged commodity boom. Post the recession in the early 1990s, the Australian economy was opened to international players with the deregulation of interest rates, floating of the Australian dollar and reduction in tariff barriers, which provided the country the flexibility it needed to adjust to changing global economic conditions.
The Australian economy, which was protected for a majority of the 20th century, introduced a series of reforms starting with the deregulation of the financial sector around the 1970s, including floating of the exchange rate. Subsequently, in the mid-1980s, further reforms such as tariff cuts, partial decentralization of wages and privatization of Government assets were introduced. Reduced protectionist measures to industries meant a decline in the share of manufacturing to total output. However, the decline in the manufacturing sector was offset by growth in trade focused industries such as mining and agriculture. Consequently, the share of trade focused industries in the overall GDP increased from 25% to 30% during this period (currently this share is >40%). Financial discipline introduced through these reforms, along with reduced government debt, improved Australia’s resilience in dealing with the dot com bubble in 2000 as well as the global financial crisis of 2008.
Australia’s success as a global economy is also a factor of its strong trade and investment relationships with Western economies over several decades and more recently with Asian countries such as China, Japan and Indonesia. The current economic, political and business environment in India and Australia has created a platform to supplement collaborative efforts to give an impetus to trade and investment between the two countries.
1 Australia Benchmark Report, 2019, Austrade.