Australia's Economic Growth

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.

This has been the result of inflationary pressures due to excessive consumer demand, and a world increase in oil prices, the RBA’s primary objective is to contain inflation at 2-3% whilst also achieving sustainable growth. The current increases in interest rates will result in lower aggregate demand as consumers have less disposable income. This results in reductions in inflationary expectations, and a decrease in the demand for imports. Furthermore higher rates of interest will encourage overseas investment into Australia, thus resulting in an increase in the demand for the Australian dollar. An increase in the demand for the AU$, and a decrease in its supply due to less import expenditure will result in an appreciation of the AU$ in forex markets. Overall this results in depressed economic activity and lower levels of growth. However the RBA has been able to increase interest rates in order to contain inflation while maintaining economic growth. This is because the global economy has continued to grow at record pace, with strong growth in the US and China, and the recovery of Japan and Europe. Consequently demand for Australian exports has remained high, thus creating opportunities for increased production and subsequent economic

A rise in per capita GDP signals growth in the economy and tends to translate as an increase in productivity. (Investopedia, n.d.)

Australia and China both adopt different economic system in exchange for a substantial economic growth. China is in the process of a developing nation employing a command economy, which means the decisions on production and investment is decided upon the government. In comparison, Australia is a highly developed nation with a mixed market economy, meaning that the economy has a certain degree of planning involving the government, but the private sector dictates most of the economic decisions.

Another desirable effect of economic growth is increased tax revenue, the government receives more money from tax payers with out having to increase tax rates. If people are earning more, the more money they will pay in tax, the more money companies make the more tax they must pay to the government. The more money the government gains in tax revenue the more they can do to improve the country, they can invest in transport and infrastructure, they can make improvements to health care and they may even need to employ more people further reducing unemployment.

GDP: Gross Domestic Product per capita by Purchasing Power Parities (in international dollars, fixed 2011 prices). The inflation and differences in the cost of living between

There has been a rapid growth in the service sector jobs and a strong decline in manufacturing employment (Murphy and Watson, 2009). Since the economic boom in the 1950s and 1960s, the Australian economy has been unable to stand the growth of living standards appreciated by households in that period.

The study of economic growth focuses on the long-run trend in aggregate output as measured by potential Gross Domestic Product (GDP). Increasing the growth rate of potential GDP is key to raising the level of income, the level of profits, and the living standard of the population.

GDP per capita is the market value of the final goods and services produced in a country during a given period per person (McDowell et al. 2012). This could also be explained as a measure of quantity of goods and services available to a typical resident of the country at a particular period. GDP per capita is used as an indicator of standard of living because it reflects the accessibility of goods and services to a person.

Gross domestic product measures national income and output for a country’s economy, and is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. Per capita GDP is a measure of the total output of a country that takes Gross Domestic Product and divides it by the number of people in the country. The GDP per capita in China was recorded at 6894.50 USD as of 2016, and this is equivalent to 55% of the world’s average.

Economic growth refers to the rate of increase in the total production of goods and services within an economy. Economic growth increases the productivity capacity of an economy, thereby allowing more wants to be satisfied. A growing economy increases employment opportunities, stimulates business enterprise and innovation. A sustained economic growth is fundamental to any nation wishing to raise its standard of living and provide a greater well being for all. Gross domestic product (GDP) is the monetary value of all final goods and services produced over a year. It is the total value of production within the economy. The total value of production is the total value of the final goods or services less the cost of

In March 2015, Greg Jericho published an article called Weak, weak growth and six things about the state of Australia’s economy that outlined how in the past 6 out of 10 quarters the Australian

Economic Growth is caused by improvements in the quantity and in the quality of the factors of production such as human capital (labour) and capital stock. Indeed, it permit to enhance the productivity of an economy and thus its creation of wealth.

Gross Domestic Product (GDP) is the total market value of a country’s output. It is the market value of all final goods and services produced within a given period of time by factors of production within a country.