Following a 2.1% increase in 2016-17, Australia’s real GDP grew by 2.9% in 2017-18, according to the latest National Accounts figures released by the Australian Bureau of Statistics. We are now entering our 28th consecutive year of economic growth and between 2019 and 2023 our economy is predicted to outperform every other major advanced economy, according to the International Monetary Fund’s (IMF) World Economic Outlook April 2018. This impressive growth record has been supported by Australia’s strategic location within the dynamic Asian region, strong economic fundamentals and a portfolio of globally significant industries that represent high growth opportunities for the future.
From 1991-92 to 2017-18 Australia’s economy grew by an average rate of 3.2% per year in real terms and is now deep into its 28th year of uninterrupted annual economic growth, a record unequalled by any other developed nation over this period. Our average growth rate over the 27 financial years of GDP growth from 1992 to 2018 (see Chart 1 below) is well above that of all major developed economies such as the US (2.5%), UK (2.1%), France (1.6%), Germany (1.4%) and Japan (0.9%).
Australia’s strong growth has also been broad based over the past 27 years, with 12 out of 19 major sectors expanding by at least 3% a year (see Chart 2 below). The average annual growth rate of Australia's Services sector of 3.4% has outpaced growth in non-services industries of 2.1%. In particular, Australia’s technology-driven industries, such as Information, Media & Telecommunications; and Professional, Scientific & Technical Services increased by an annual average rate of about 5% over this period, while Financial/Insurance Services and Health Care & Social Services also expanded solidly at a rate of almost 4.5% each.
Despite some perceptions to the contrary, Australia’s economy involves much more than Mining and Resources, with almost three quarters of economic output generated by Service sectors. Our sophisticated financial services industry is now the largest contributor to Australia’s production, generating 9.5% of the nation’s total gross value added (GVA). The Construction (8.1% of total GVA), Health Care & Social services (7.9% ) and Professional, Scientific and Technical services sectors (7.4%) are larger than our Mining and Manufacturing industries, at 6.4% and 6.3% of GVA respectively.
According to IMF forecasts released in April 2018, Australia is expected to realise average annual real GDP growth of 2.8% between 2019 and 2023 – the highest forecast among major advanced economies. More significantly, Australia is the only country in the developed world with a period of uninterrupted economic growth over the past 27 years, based on the informal definition that a recession requires two consecutive quarters of negative economic growth. In other words, all of the other 34 member countries in the Organisation for Economic Co-operation and Development (OECD) have experienced at least one period of two consecutive quarters of negative GDP growth since 1991, with many economies experiencing two episodes of negative growth during that period: one in 2001 following the collapse of the Dot.Com bubble; and one in the 2008 Global Financial Crisis. Details of our earlier analysis can be found here.
The size of the Australian economy is typically described in terms of GDP, and the structure and performance of the economy in terms of industry GVA. GDP is an estimate of the total market value of goods and services produced in Australia, in a given period, after deducting the cost of goods and services used up in the process of production (intermediate consumption), but before deducting the allowances for the consumption of fixed capital (depreciation). Industry GVA is the term used to describe the unduplicated value of goods and services produced by individual industries. GVA of the total economy usually accounts for more than 90% of GDP (about 93%of GDP in 2017-18).