Helped by its massive natural resources, Australia has weathered the global financial crisis better than other Group of 20 economies. In 2012, its economy grew 3.1 per cent, compared with 1.6 per cent in the United States and 1.1 per cent in Canada.
Australian Treasurer strikes sour note on government budget
Australian Treasurer Wayne Swan yesterday warned of a "dramatic" hit to the government's bottom line due to falls in commodity prices, steeling voters for an austere budget in an election year.
Swan said government revenues had taken a "massive hit" from a plunge in its terms of trade - the value of exports measured against imports - with prices for its key mining products down but the Australian dollar remaining high.
"This has contributed to subdued price pressures and weaker profitability across the economy, which means that nominal GDP has grown more slowly than real GDP for three straight quarters," said Swan in his weekly economic note. "This run is unprecedented since records began."
Swan said revenues were A$6 billion (HK$48.46 billion) lower than forecast for the first seven months of the fiscal year to June "primarily due to the impact of lower corporate profits".
He is due to hand down the budget in May.
"While revenue has taken a big hit, the monthly financial statements also show that government expenditure is running slightly below our forecasts," Swan said. "This further highlights that the dramatic hit to the budget bottom line is being driven entirely by lower-than-expected revenues, while the government continues to exercise spending restraint."
Australia is due to hold an election on September 14 and the ruling centre-left Labor party is trailing in the polls.
The country is also facing a transition away from the key mining sector as the investment peak looms, highlighting soft patches in the economy.
The economy grew 0.6 per cent in the three months to December as exports increased, but analysts have warned of a subdued picture overall, despite job data released on Thursday showing employment growth at a near 13-year high.