Since the mid-1990s, the Heritage Foundation, working collaboratively with the Wall Street Journal, has compiled voluminous data on the economic condition of every country in the world, ranking these countries according to its own determination of what constitutes “economic freedom.” For the Heritage Foundation, this means low levels of corruption, minimal government intrusion in business, openness for foreign investment, and low corporate tax rates. It means that, by the Foundation’s calculations, businesses operating in those countries function unencumbered by excessive regulations, with the markets determining winners and losers. Under its system of ranking, Australia is listed as the third freest economy in the world. Significantly, four of the top five economies rated according to levels of economic freedom are found in Australia’s neighborhood, with Hong Kong, Singapore, and New Zealand also included. The reason why this is significant is because, for much of the past 30 years, Southeast Asia, where Australia is located, witnessed enormous economic growth in those countries that permitted capitalist economic practices (meaning, of course, that Vietnam was a late-comer to the prosperity party and Cambodia and Laos have lagged far behind, although, in the former’s case, the legacy of Khmer Rouge rule and the consequent genocide certainly played on role in its stunted growth). Known informally as the “Asian Tigers” because of their strong records of economic growth, countries like Malaysia, Thailand, Singapore, and Indonesia opened their markets to free trade and allowed private enterprise to flourish. As a member of the Association of Southeast Asian Nations (ASEAN), Australia was integrally involved in facilitating this impressive growth by trading among its fellow Asian countries, including allowing Asian investments in Australia while investing in its neighbors’ economies.
For a country with a population of only 22 million (the U.S. population is over 300 million), Australia’s Gross Domestic Product, the calculation of the total wealth produced in a given country during a year, is very large, amounting, according the U.S. Central Intelligence Agency’s World Factbook, to $986 billion for the year 2012, making it the 19th largest economy in the world. The CIA estimates Australia’s foreign debt at $1.497 trillion, ranking it 13th in this less laudatory category of economic strength. Finally, Australia’s trade balance is -$47.1 billion, a significant increase in its trade deficit over the preceding year (2011’s trade imbalance was -$29.5 billion). [It should be noted that all dollar figures reflect U.S. dollars, not Australian dollars]
Australia was not immune to the global economic recession that struck during the late 2000s, and its trade deficit and level of foreign debt reflect the impact of that recession.