Median Household Income Overview
The indicator refers to the median income of a household in a country. Median household income divides households into two equal segments, such that the first half earns less than the median income while the second half earns more. The median income is defined in PPP (Purchasing Power Parity, in Current International Dollars) terms to avoid exchange rate fluctuations due to inflationary tendencies across countries. The median income level is generally accepted as a better indication of well-being or actual income distribution as it is not skewed by disproportionate data.
According to Global Data, the top ten countries with the highest median household income in the world are Singapore, Iceland, Norway, Sweden, Ireland, Luxembourg, Belgium, the United States, Cyprus, and Australia. The average median household income (PPP) was $40,094 in 2021.
Australia Median Household Income Highlights in 2021
Australia’s median household income (PPP) hit $63,393 in 2021, an increase of 1.0% over the previous year. Between 2010 to 2021, Australia’s median household income increased by 10.2%.
According to the OECD, Australia has a Gini coefficient of 0.33 on a scale of zero (complete equality) to one (complete inequality), marginally higher than the average of 33 countries, for which data is available from 2018 and later. Compared to its peers such as Canada, France, and Germany, Australia has higher levels of income inequality.
The country has performed well in terms of human development, with high levels of healthcare, education, and income. According to the UN Development Programme’s Human Development Report for 2020, the country was ranked eighth out of 189 countries on the (Human Development Index) HDI, with a score of 0.944. This is well above the OECD and global averages.
Increasing Household Debt in Australia
The ongoing slashing of interest rates by the central bank, alongside record high housing prices and housing debt, threatens to create a housing bubble in Australia. According to the OECD, the household debt as a percentage of net disposable income was 202.1% in 2020, compared to 186.0% in 2011.
Recent trends influencing Global Economic Growth
Increased COVID-19 impact:
As a result of Omicron, a new variant of COVID-19, more cases have been reported worldwide, resulting in the disruption of supply chain management. However, the global vaccination drive has reduced the fatality rate from the coronavirus.
Rising Inflation and Interest Rates:
As a result of rising inflation rates in both developing and advanced economies, central banks have been forced to tighten monetary policy and raise interest rates to keep prices from rising. However, a steady increase in interest rates could cause financial distress in some economies.
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