Australia

Aboriginal settlers arrived on the continent from Southeast Asia about 40,000 years before the first Europeans began exploration in the 17th century. No formal territorial claims were made until 1770, when Capt. James Cook took possession in the name of Great Britain. Six colonies were created in the late 18th and 19th centuries; they federated and became the Commonwealth of Australia in 1901. The new country took advantage of its natural resources to rapidly develop agricultural and manufacturing industries and to make a major contribution to the British effort in World Wars I and II. In recent decades, Australia has transformed itself into an internationally competitive, advanced market economy. It boasted one of the OECD's fastest growing economies during the 1990s, a performance due in large part to economic reforms adopted in the 1980s. Long-term concerns include climate-change issues such as the depletion of the ozone layer and more frequent droughts, and management and conservation of coastal areas, especially the Great Barrier Reef.

Climate: generally arid to semiarid; temperate in south and east; tropical in north. Terrain: mostly low plateau with deserts; fertile plain in southeast.

Australia has an enviable, strong economy with a per capita GDP on par with the four dominant West European economies. Robust business and consumer confidence and high export prices for raw materials and agricultural products are fuelling the economy, particularly in mining states. Australia's emphasis on reforms, low inflation, a housing market boom, and growing ties with China have been key factors behind the economy's 16 solid years of expansion. Drought, robust import demand, and a strong currency have pushed the trade deficit up in recent years, while infrastructure bottlenecks and a tight labour market are constraining growth in export volumes and stoking inflation. Australia's budget has been in surplus since 2002 due to strong revenue growth.