Economic growth, an annual increase in the real value of goods and services produced by an economy, must be sustainable where the growth in GDP is high enough to reduce unemployment without causing inflation or a CAD blow out. In terms of economic performance Australia has permanently lowered its rate of inflation and reduced unemployment and though through major economic reforms Australia has raised its rate of economic growth, it still experiences periodic increases in its CAD and exchange rate volatility. The higher pace of growth has reduced unemployment to increase living standards but long-term, structural and underemployment have risen. Australia's external stability has worsened with increased volatility of the exchange rate, major CAD woes, and record foreign liabilities resulting in an imbalance external sector.

Australia's current rate of economic growth of 4.0% is mainly caused by a jump in public investment (the housing boom), strong consumer demand causing...