Australia's GDP is expected to grow 2.7% in 2013. Among the world's "rich countries" that's only behind the East Asian trio of Singapore, South Korea and Taiwan -- all of which are expected grow at 2.9%-3% this year.
Australia is also doing significantly better than the other Western mineral-rich economy, Canada, which is expected to grow by 1.9% in 2013.
The really good news is that Australia has achieved this success without resorting to misguided "stimulus" policies. Australia's budget is forecast to be in surplus for the 2012-2013 fiscal year -- something completely foreign to most Western countries. And if this gets missed (an election is expected in September, after all) it's likely not going to miss by much.
Australia's monetary policy is sensible, too. The Reserve Bank's policy rate is 3.0%, while Australian inflation has been only 2.2% over the last 12 months. No place other than South Korea is running its finances and monetary policy at this level of soundness.
If the center-right Liberal/Country Party coalition wins in September (as the opinion polls are forecasting), we can expect some tax cuts and maybe faster growth.
A paragon of good management like Australia naturally attracts hot money, and that has pushed the exchange rate up by about 6% in the last year. As a result, Australia is running a payments deficit of about 5% of GDP, financed by inflows of foreign capital into both Australian investments and the government bond and money markets.
Australia is the world's largest exporter of coal, the third largest producer of iron ore, the second largest producer of gold after China, the largest producer of bauxite/aluminum and the second largest producer of nickel and zinc.
Only in energy does it lag. It's the third largest producer of natural gas, expanding rapidly, but nowhere near self-sufficient in oil. But even that is about to change in a dramatic way.
As Dr. Kent Moors has reported, a recent discovery in Australia's Arckaringa Basin could contain as much as 233 billion barrels (or $20 trillion worth) of recoverable shale oil.
To put that into perspective, that's a mere 30 billion barrels shy of the estimated reserves of Saudi Arabia. It is also bigger than the Athabasca oil sands in Canada, which are estimated to hold about 170 billion barrels of proven or probable reserves.
he simplest way to invest in Australia is through the index ETF iShares MSCI Australia Index (NYSE:EWA). At $2.5 billion in assets, this is a good size and its expense ratio is only 0.53%. With an excellent 5.2% dividend yield of and a P/E of 15, EWA offers solid value, especially for income investors.