This report will show an overview of the current state of the Australian economy and its management by the Federal government through examining economic indicators such as economic growth (GDP), unemployment, inflation and trade.
The figure obviously had not return to pre-crisis level. Moreover, recent commodity prices had fallen significantly which will affect Australia’s short and long term economy.
China has, for a sustained period of time, been one of Australia's most important trade and economic partners. But this has not always been the case. Since the late 1970s China has moved from a closed, internal focused economy to more of a global market oriented one that plays a major part in other nations economies, like Australia's. Although China is technically a Socialist nation, market capitalism is actively encouraged, much the same as in Australia. In 2010 China became the world's largest exporter, with exports ranging from natural resources to manufactured goods. (CIA-World fact book) Australia's economy, in this sense, differs from that of China's. As Australia is simply too expensive to manufacture goods ("Holden, Ford,
Booms, busts, recessions, and growth; all of the preceding terms are characteristics of a typical market economy. There are times when an economy can flourish spectacularly and there are times when it can fail miserably. Consequently, it is the responsibility of a nation’s central bank to manage these fluctuations through conducting effective monetary policy. The following paper will assume the perspective of the Reserve Bank of Australia (RBA) and critically analyze the past, present, and future of the Australian economy while considering specific sectors.
Australia is the world 's 13th largest economy (as on 2016), with output as measured by gross domestic product and world 's 19th largest economy (as on 2016), with output as measured by gross domestic product at purchase power parity.
GDP growth, unemployment figures, inflation rates and money aggregate figures are important interrelated indicators that can help to determine the health of the Australian economy. The patterns evident in these indicators represent practical expressions of economic health and can be seen as the result of action taken by the Reserve Bank to achieve the three key objectives:
The economy in Australia runs through the economic cycle involves in the cycle of boom and recession in a business. In an economic boom, businesses make profits by increasing the prices of their products by the consumers who are willing to spend their personal disposable income. Although, there are disadvantages during an economic cycle when it comes to recessions in the economy. Recessions can make businesses not earn profits out of its sales because consumers didn’t have the confidence to spend their money. Employees need money in order to save but the business isn’t making a profit so they have to cut down some employees because they don’t have enough money to pay all of their employees. Economic influence is an external influence because
The second key national interest of Australia is the economy. Australia’s capital, jobs, standards of living, technological innovations and social advances rely substantially on exports and commodity values within Southeast Asia and the Pacific (Department of Foreign Affairs and Trade 2016a). The stability of South East Asia and the Oceania
As a result of the global recession, Australia’s GDP was forecasted to contract by 0.5% in 2009-10 in comparison to other advanced economies which were expected to contract by 3.75% in the same year. However minor the reductions in GDP, it was evident that Australia was not exempt from the global recession although is better placed and is expected to perform better than almost all other OECD economies. The global recession has also triggered a fall in household wealth and a disruption in consumer confidence with consumption forecasted to contract by 0.25% in 2009-10.
The mining boom has had broad, positive effects on the Australian economy, especially at a time when the global economic situation was precarious. The growth in exports and investment over the past ten years have supported increased employment, regional development and increased revenues for both federal and state governments. Figures from ABS (2014) show that the mining sector accounted for around 11 per cent of Australia’s GDP in 2013-14 where earnings reached 195 billion, up from 7.8 per cent in 2003-04. Over the past decade the mining industry has grown more than any other industry in Australia with its industry gross value added increasing by $72 billion in that time – more than 50 per cent higher than the second largest contributor to growth. In 2013-14 mining was the key contributor to Australia’s economic growth, followed by financial services and construction.
The growth of the Asian Economy has had positive structural effects on the Australian Economy. The trade volumes are at record high levels with China and the appreciation of the exchange rates have provided a boost to the economy. There has also been a rise in the resource investment, which has seen a reallocation of factors of production, which has lead to employment growth in these sectors. The focus of the Asian economies is on the production and consumption of goods and the commodity intensive nature of this rise has led to an increase in commodity prices. This has led to an increase in the productive capacity, which supports the exports, employment, incomes, taxes and wealth of the Australian population. The strength of the resource sector has had a positive effects on the exchange rate which when combined with the stable inflation rate has led to a significant increase in wage dollar of the working population (Plumb, Kent, & Bishop, Implications for the Australian Economy of Strong Growth in Asia, 2013).
Unemployment has been one of the most persistent of all economic issues, leading to rising debates from economists over the causes of it and policies which should be used to address the matter. Australia’s unemployment rate has continued to be volatile with fluctuations every few years due to several mishaps however, has remained relatively stable for a decade. According to the unemployment rate reported by the Australian Bureau of Statistic, from 1978 to 2015 Australia is averaged to be 6.9 percent, with record high 10.9 percent in 1992 and an all-time low of 4 percent in 2008. During the early 1990s, Australia underwent the effects of the global recession causing a significant upsurge in unemployment rates, its highest level since the Great Depression of the 1930s. The falling aggregate demand, caused by this mishap, prompted cutbacks in production and the
Australia has been involved in trade that comprises of, investment, financial flows, technology transfers and the moving of labour since its foundation as a colony. These are all parts of a global economy. What changed are the size, direction and influence of these movements, especially since 1980. There are some factors that have helped this change. They include:
The article summarises the economic situation in the post mining investment boom period in Australia, touching on several macroeconomics including but not limited to economic growth, unemployment, GDP, fiscal and monetary policies.
Australia has been involved in trade, investment, financial flows,technology transfers (from one place to another) and the moving (from one place to another) of labour since its foundation as a colony. These are all parts of a worldwide economy. What has changed is the size, direction and influence of these movements (from one place to another), especially since 1980. There are some factors that have helped this change. They include: