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Australia’s business prospects, on the condition of continued global demand for commodities, remain quite bullish. In fact, Australia’s advanced market economy, with its diverse and abundant natural resources, has enjoyed a significant increase in terms of trade since the beginning of the commodity bull market in 2000. Key products in the mining and energy sectors include iron ore, gold, copper, alumina, uranium, coal and natural gas, whereas agricultural exports are predominantly wheat, meat and wool. While its true that the service sector – including tourism, education, and financial services – accounts for roughly 70% of GDP, its still mining and agriculture that fuel economic growth by contributing substantially to export performance. Industry plays the least significant role in the economy, with food processing, car manufacturing, and chemicals being the biggest players in this sector.
Since resource hungry nations such as Japan, China, South Korea and the United States are amongst Australia’s largest export markets, its important to understand their importance on the health of the Australian business sector. Even though long-term demand for commodities seems assured, any short to medium-term blip (ie. global recession), could have rather negative reverberations throughout Australia. This is particularly true, since Aussies have high house prices combined with some of the highest household debt levels in the world.