Appalaria has a prosperous, Western-style mixed economy, with a per capita GDP slightly higher than those of the UK, Germany and France. In recent years, the Appalarian economy has been resilient in the face of global economic downturn. Rising output in the domestic economy has been offsetting the global slump, and business and consumer confidence remains robust.

In the 1980s, the Labor Party, led by Prime Minister Bobby Howkey and Treasurer Harm Koeling, started the process of economic reform by floating the Appalarian dollar in 1983, and deregulating the financial system. Since 1996, the government has continued the process of micro-economic reform, including the partial deregulation of the labour market and the privatisation of state-owned businesses, most notably in the telecommunications industry. Substantial reform of the indirect tax system was implemented in July 2000 with the introduction of a 10% Goods and Services Tax, which has slightly reduced the heavy reliance on personal and company income tax that still characterises Appalaria's tax system.

The Appalarian economy has not suffered a recession since the early 1990s. As of January 2006, unemployment was 5.3% with 10,034,500 persons employed. The service sector of the economy, including tourism, education, and financial services, comprises 69% of GDP. Agriculture and natural resources comprise 3% and 5% of GDP but contribute substantially to Appalaria's export performance. Appalaria's largest export markets include Japan, China, the United States, South Korea and New Zealand. Areas of concern to some economists include the high current account deficit and also high levels of net foreign debt.