Australia’s position in the global economy appeared to improve significantly in the early 1970s. Strong economic growth in the industrial nations drove up international demand for primary products, pushing their prices to record levels. Australia’s exports boomed. The world economy was shaken by dramatic oil price rises in 1972 and 1973, but Australia seemed better placed than most of the OECD in that it was more or less self-sufficient in crude oil and its coal exports made it a net energy exporter. Australia’s export earnings were so great in 1972 and 1973 that they produced an overall current account balance of payments surplus – a rare occurrence. However, inflationary forces from the late 1960s undermined the sustainability of economic growth in the industrial countries. When such nations slowed their growth in response to the oil price rises, an international recession brought the post-war Long Boom to an end.

Australia was not insulated from these impacts – and indeed, inflation in Australia was higher than in most of the rest of the OECD in the 1970s. In 1974 and 1975, economic growth in Australia slowed to under 2 per cent and unemployment began to rise. From the mid-1970s, the global economy entered a more turbulent period, characterised by slower growth of world trade and great volatility in the world’s financial system. This created international conditions that were much less favourable to Australia than those of the 1960s. This chapter outlines the main changes that brought about the end of the Long Boom internationally, and the weaker economic conditions that replaced it. Chapter 11 looks at Australia’s struggle to cope with these adverse international forces in more detail.