Figure 1.1 Real gross domestic productAverage annual change to 2014
The OECD compares growth rates among countries using a standard unit of measure — purchasing power parity. This adjusts a country’s individual growth rate according to the nominated currency, in this case US dollars. Figures are not directly comparable with official statistics used in each country. Data for New Zealand and the OECD total are estimated values.
OECD (2015) OECD Statistics, Annual National Accounts, Main Aggregates, Gross Domestic Product, constant prices, constant PPPs, reference year 2010, USD millions, Viewed 10 February 2016, http://stats.oecd.org
Australia has a history of strong economic growth, but this has moderated in recent years.
Australia’s gross domestic product compares well internationally. In 2014, Australia’s growth rate was 2.3 per cent, slightly lower than its five year average growth rate. Australia’s growth rate continues to be higher than the average growth rates for the OECD and euro area.
In the last year, notable strong performance has come from New Zealand and the United Kingdom, which recorded growth rates above their five year averages, at 3.0 per cent and 2.9 per cent respectively.
In general, the global economy continues to recover from the global financial crisis. Its recovery has been supported from cash injections by central banks, low interest rates, and low oil prices.
Figure 1.2 Gross value addedAverage annual change to 2014–15
Australian Bureau of Statistics (2015) Australian System of National Accounts, 2014–15, cat. no. 5204.0, table 1 and 5
Information, Media & Telecomms, Accommodation & Food Services and Finance and Insurance have been the standout industry performers over the past year.
Growth across industries has varied significantly in recent years. Over the last year, several industries have experienced growth rates which depart significantly from their five year averages.
Not all industries are growing, with Professional, Scientific & Technical Services contracting sharply, by -4.8 per cent. Manufacturing and Agriculture, Forestry & Fishing also continued to decline, consistent with the five year trends in these sectors. While demand for services is solid overall, there is significant variance between individual industries.
Find out more about industry gross value added here.
Figure 1.3 Labour productivityAverage annual change in the level of output per hour worked to 2014
OECD (2015) Economic Outlook, Economic Outlook Annex Tables, Annex Table 12, Labour productivity, Viewed 22 January 2016, http://www.oecd.org/eco/outlook/economicoutlookannextables.htm
Australia’s labour productivity growth exceeds most OECD nations.
Labour productivity growth supports ongoing improvement in Australia’s living standards. Growth in labour productivity depends on investment in physical capital, technological advancement and improvements in knowledge intensity and skills.
After several years of moderate growth in labour productivity, Australia has recently accelerated. This is partly a result of significant investment in the mining sector beginning to generate large volumes of output.
Find out more about labour productivity here.
Figure 1.4 Labour productivity growth by industryAverage annual change in gross value added per hour worked to 2014–15
Australian Bureau of Statistics (2015) Australian System of National Accounts, 2014–15, cat. no. 5204.0, table 15
Labour productivity for All Industries averaged 1.0 per cent over the last year. Most industries are recording steady growth over the longer term.
Labour productivity performance has been widely divergent across industries in the last year.
Employment growth began to pick up in 2015, particularly in services industries. This may have implications for future labour productivity, as these industries are less productive on average.
Find out more about labour productivity here.
Figure 1.5 Multifactor productivity Average annual change in total multifactor productivity to 2014
The Conference Board Total Economy Database™ (2015) Growth Accounting and Total Factor Productivity, 1990-2014,
Australia’s multifactor productivity growth has been negative over the last five years.
Multifactor productivity growth measures an industry’s output relative to the value of all of the inputs of labour, capital and materials. It is a way to track overall efficiency in production.
Multifactor productivity is the measure that comes closest to the underlying concept of productivity. Growth in multifactor productivity is the growth of output over and above the growth of labour and capital inputs.
Australia’s multifactor productivity growth is falling. This reflects a tendency towards high capital investment, which has not yet been matched by the rate of growth in actual output.
There has been a slowing of multifactor productivity across most advanced economies in recent decades. Economic reforms are necessary to improve results.
Find out more about multifactor productivity here.
Figure 1.6 Multifactor productivity by industryAverage annual change in total multifactor productivity to 2014–15
Australian Bureau of Statistics (2015) Australian National Accounts: National Income, Expenditure and Product, Sep 2015, cat. no. 5206.0, table 1
Multifactor productivity growth varies widely across industries. The biggest improvements are being driven by a combination of prior investment and technological improvement.
Multifactor productivity growth across the economy has been constrained in recent years by poor performances in Mining, Manufacturing, Construction, and Transport.
The data shows that Mining has started to reverse this pattern as it shifts further into its production phase. Stronger growth is also occurring in Information Media & Telecomms and Finance & Insurance, with both benefiting from improved technology.
In contrast, multifactor productivity growth in Professional, Scientific & Technical has declined significantly over the last year.
Find out more about multifactor productivity here.
Figure 1.7 Real effective exchange ratesIndex (2005 = 100)
The World Bank (2015), World DataBank, World Development Indicators, Real effective exchange rate index,
Viewed 9 March 2016, http://databank.worldbank.org/data/reports.aspx?source=2&country=&series=PX.REX.REER&period=#
Australia’s competitiveness has been supported over the last year by a fall in the real effective exchange rate.
The real effective exchange rate measures the value of a country’s currency relative to a basket of other major currencies adjusted for the effects of inflation. It is a way to track the international competitiveness of a country with respect to other countries.
Australia’s real effective exchange rate increased during the 2000s. This appreciation was driven by the mining boom and the subsequent rise in Australia’s terms of trade.
After several years of a relatively high real effective exchange rate, Australia’s competitiveness has started to improve as the rate has fallen. This is partly a result of the fall in the Australian dollar and the shift in the mining boom from the investment to production phase.
Find out more about real effective exchange rate here.
Figure 1.8 Energy productivityGDP ($US millions) per PJ of energy consumption
Energy productivity is presented as the ratio between GDP (2005 $US millions calculated using purchasing power parities) and energy consumption (petajoules). Australian energy consumption data is for financial years.
International Energy Agency (2015) Energy Balance of OECD Countries
Australia’s energy productivity has increased over the last five years, but the gains have been smaller than those made in many other developed economies.
Energy productivity is defined as the ratio of gross domestic product to energy consumption. It is a broad measure, which picks up traditional energy efficiency measures and also wider energy market reforms.
Energy productivity growth has varied across countries. Over the last five years, Australia’s energy productivity has improved, increasing at an average annual rate of 2.5 per cent. Australia outperformed the average annual growth in a number of counties, including the United States, New Zealand and Canada. Despite this improvement, Australia’s average annual growth still lags behind the United Kingdom and Japan.
The improvement in Australia’s energy productivity over the past five years is largely attributable to energy efficiency gains and structural changes such as the move to more service industries, which are less energy intensive.
Ongoing improvements in energy productivity will improve business competitiveness and also allow Australia to meet global environmental and climate change obligations.
Figure 1.9 Growth in exports of goods and servicesPer cent change in value of goods and service exports, 2005 – 2015
Monthly data, seasonally adjusted, current prices
Australian Bureau of Statistics (2015) International Trade in Goods and Services, Australia, Nov 2015, cat. no. 5368.0, table 1 and World Trade Organisation (2015) Statistics Database, Total merchandise trade and Merchandise trade by commodity, Viewed 7 March 2016, http://stat.wto.org/StatisticalProgram/WSDBStatProgramHome.aspx
Australia’s services exports are growing steadily.
Australia’s export profile is changing. In 2015, Australian goods exports totalled $251 billion and services exports totalled $66 billion. Growth in goods exports has declined over the last five years, with fluctuations in value over the period. In contrast, services exports have grown, increasing by 38 per cent since the start of 2010.
The trend in goods exports is reflected in Australia’s share of global merchandise exports, which continue to decline — from 1.33 per cent in 2013 to 1.26 per cent in 2014.
Increases in services exports are supported by recent falls in the Australian dollar, which has bolstered demand for education and travel services.
Figure 1.10 Resource and energy exports — selected commoditiesReal in 2014 prices
Australian Bureau of Statistics (2015) Special Data Request from ABS cat. No. 5465.0
Despite falls in commodity prices, the value of Australia’s resources and energy exports remains high.
The high volume of mining investment over the past decade has begun to translate into new production capacity. In 2014, selected resource and energy exports comprising iron ore, metallurgical coal, liquified natural gas, thermal coal and gold totalled $135 billion.
The value of resource and energy exports remain at or near all time highs. The recent stall in growth of some commodity exports (iron ore, metallurgical coal, thermal coal and gold) is due to increased production and supply combined with weaker demand, which has led to a fall in prices.
The value and price of liquified natural gas exports has remained strong over the past year even as production volumes rose.
Global commodity prices continued to decline in 2015. Despite this, Australia’s production of most commodities has continued to increase. The increase in volumes is unlikely to offset the effect of lower commodity prices fully, with forecasts of a decline in future years.
Table 1.1 Australia's global competitiveness rankingsLatest and previous ranking
|Previous year's ranking||Latest ranking|
|IMD Overall Competitiveness||12||12|
|WEF Global Competitiveness Index||14||16|
|IMD Overall Competitiveness||17||18|
|WEF Global Competitiveness Index||21||22|
WEF rankings were out of 144 economies in 2014 –15, while IMD rankings were out of 61 economies in 2015. The number of economies examined by both reports can vary from year to year. There are 34 OECD member economies. In the 2013 survey edition, there were 57 respondents for the executive opinion survey. In 2014, there were 66 respondents for Australia.
IMD World Competitiveness Yearbook Online (2014), IMD World Competitiveness Yearbook Online (2015), World Economic Forum (2014) The Global Competitiveness Report 2014 –15, Viewed 1 December 2015,http://reports.weforum.org/global-competitivenessreport-2014-2015/ and World Economic Forum (2011) The Global Competitiveness Report 2011-12 , Viewed 1 December 2015, http://www.weforum.org/reports/globalcompetitiveness-report-2011-2012
Australia remains a relatively competitive country.
The World Competitiveness Yearbook is an annual report published by the Swiss-based International Institute for Management Development (IMD). The Yearbook provides rankings using a competitiveness index. It is reliant on statistical data and perceptions via their Executive Opinion Survey.
The IMD ranked Australia 18th out of 61 countries in terms of overall competitiveness. Australia is ranked 12th when compared with other OECD countries.
The Global Competitiveness Report is an annual report published by the World Economic Forum (WEF). The Report ranks the competitiveness of economies using the Global Competitiveness Index (GCI). The GCI examines the impact of factors including the macroeconomic environment, the quality of the country’s institutions and the state of the country’s technology and supporting infrastructure. The index is informed by data from the WEF’s annual Executive Opinion Survey as well as statistical data from internationally recognised agencies.
In 2014–15, the WEF ranked Australia 22nd out of 144 economies in its GCI. Australia is ranked 16th when compared to other OECD countries.
Table 1.2 Industry growth sectors, key economic indicators 2014–15Growth sectors 2014–15
|Growth sector||Employment ‘000||Gross value added $ billion||Labour productivity $ per hour|
|Food & Agribusiness||525.9||53.9||54.1|
|Mining Equipment, Technology & Services||77.7||10.9||68.7|
|Oil, Gas, & Energy Resources||111.0||54.9||236.5|
|Medical Technologies & Pharmaceuticals||70.9||10.5||80.1|
Australian Bureau of Statistics (2015) Labour Force, Australia, Detailed, Quarterly, Nov 2015, cat. no. 6291.0.55.003, data cube EQ06
Establishment of Industry Growth Centres is intended to improve the productivity and competitiveness of key growth sectors in the Australian economy.
In 2014, the Government identified five Industry Growth Centres:
The Industry Growth Centres Initiative drives innovation, productivity, and competitiveness by concentrating investment in key industry growth sectors. Growth Centres will lift the levels of collaboration to allow them to better capitalise on the research and development and scientific knowledge generated in Australia. The Centres will help align industry and innovation policy and programmes to contribute to improving the productivity, competitiveness and innovative capacity of the sectors.
Analysing the value and employment levels of the growth sectors can help understand their performance characteristics. For example, Food & Agribusiness and Oil, Gas & Energy Resources have similar gross value added figures, but Food & Agribusiness employs five times more people.