Lessons in National Frugalness: Australian Economy

Australia was one of the very few economies around the world that didn’t go into substantial debt during the Global financial Crisis of 2008. Here are few reasons why.

Demand for commodities

The mining sector is Australia has seen unparalleled growth since 2003 and being a big country, Australia has its fair share of minerals in the ground. Anything from Iron Ore, Gold, Copper even Uranium has sent the local share market into a frenzy.

This has also made people like Gina Rinehart and Clive Palmer very rich indeed. Rinehart who has a reported net worth of almost AU$20 Million and considered to the richest woman in the world as for Queensland’s richest man, his wealth has gotten him into all sorts… from designing the Titanic, putting Dinosaurs on a golf course, even set up his own political party.

The demand for Australian minerals has come from Asia, in particular China where the population is becoming more and more urbanised. This has attributed to greater demand to build more housing fuelling the demand from down under.

High Value of the Australian Dollar

Any commodity boom and added investment to a particular country will invariably affect the value of the currency and the Australian Dollar is no exception. It is amazing to think that in 2001 the Aussie Dollar was worth 50 US cents, how the tides have changed and at one stage it was level or parity with the US Dollar. Currency Experts have put it down to not only strong demand in Australian commodities but the general state of other economies around the world.

What that means for the average consumer is that more and more Aussies are choosing to travel abroad due to the favourable exchange rate.

Low debt compared to the rest of the world

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Under former Prime Minister, John Howard the Australian economy started to clear a lot of debt the previous Labor administration left behind. It was so successful that by the time Howard was defeated in the 2007 election Australia posted budget surpluses. Fast forward to the Global financial crisis and many economies were struggling to pay off existing debt for example many European nations. Australia was able to weather the debt storm by having an established safety blanked to fall back on in the first place.