Over a decade of economic expansion …

The Australian economy is currently in the longest period of continuous expansion ever recorded. Strong growth has seen the unemployment rate reach 30-year lows while inflation remains low and stable.

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Economic growth

The Australian economy has grown strongly since March 1996, averaging 3.5 per cent annual growth. This is despite the economy being buffeted by a turbulent world economy and drought.

High level of business investment

Business investment has grown at an average annual rate of 8.4 per cent since March 1996. Business investment is at its highest level as a share of GDP in 32 years and has grown by more than 70 per cent in real terms over the past four years. This is paving the way for future growth in the economy.

Low unemployment

Equally impressive has been the strength of the labour market, with the unemployment rate falling to 4.5 per cent in the March quarter 2007. Over 2 million jobs have been created since March 1996.

Low inflation

Over the period of uninterrupted expansion, annual inflation has averaged around 2 per cent, right in the middle of the medium term inflation target band. This has allowed interest rates to remain low by historical standards.

Income and wealth

Australians are benefiting from the strong economy through increased income and wealth.

Strong income growth reflects strong employment and real wage growth. Since March 1996, real wages have increased by around 20 per cent. Profits have also grown strongly, particularly in the resources sector.

Total real household wealth has more than doubled over the past decade, reflecting strong growth in both dwelling and non dwelling wealth.

Graph: High business investment

High business investment

Graph: Low unemployment rate

Low unemployment rate

Graph: Low inflation rate

Low inflation rate

2 2007‑08 Budget Overview