Commodity Prices In Australia

Commodities account for 57% of the value of total exports, so that a downturn in world commodity prices can have a big impact on the economy. The government is pushing for increased exports

Although Australia remains geographically isolated from the world, international trade still remains a main factor that allows Australia’s economy to prosper. Australia’s long history of trade has created tight links and connections with other nations. Being a member of many worldwide organisations, Australia has produced many free trade agreements with countries around the world. However, recently Australia has seen a change in the composition and direction of its trade and has developed a strong trade link with the Asia-Pacific Region.

The world price of Australia 's mining exports has more than tripled over the previous decade, while investment spending by the mining segment expanded from 2% of GDP to 8%. This mining speaks to one of the biggest shocks to hit the Australian economy in generation. This paper endeavours to evaluate some of Australian economics’ effects to the mining industry, utilizing top-down analysis of the Australian economy. It will demonstrate the mining has significantly expanded Australian living standards.

Oil price increases can also stifle the growth of the economy through their effect on the supply and

Australia’s trading links with other countries, specifically the Asia-Pacific region, has led to its advancing development in the modern world. Australia has always had strong trading links with the world and relies heavily on imports and exports. Australia Imports products such as petroleum and cars from other countries primarily China, The United States and Japan.

The world price of Australia’s mining exports has more than tripled over the past decade, while investment spending by the mining sector increased from 2 per cent of GDP to 8 per cent. This ‘mining boom’ represents one of the largest shocks to hit the Australian economy in generations. This paper attempts to quantify some of its effects, using top-down analysis of the Australian economy. It will show the mining boom has substantially increased Australian living standards. By 2016, we estimate that it had raised real per capita household disposable income by 13 per cent, raised real wages by 6 per cent and lowered the unemployment rate by about 1¼ percentage points. There have also been costs. The boom has led to a large appreciation of the Australian dollar that has weighed on other industries exposed to trade, such as manufacturing and agriculture.

The mining business is where the greater part of Australia’s economy originates from. Conservative politicians are unwilling to accept climate change, for the reason that they favour society’s values and aspects to be unchanged. A case which supports this notion is Australia’s and the United States rejecting to join other countries in partaking in the Kyoto Protocol. The Kyoto Protocol aims to unite countries to set limits on their greenhouse gas emissions, to suppress the destructive effects of climate change. The United States expresses that it will not participate in the international treaty due to; absence of sufficient supporting scientific evidence, large developing countries such as China or India aren’t partaking in the movement and reducing the greenhouse emissions would mean loss in their economy. Therefore, Australia and the United States will be more reluctant to adapting accepting climate change as it will negatively affect the industries that both countries originated from and have thrived on (Vanderheiden,

For instance, in the year of 2013, the economic cycle was not in favor of Canadian miners as they were forced to tighten their production. But, the problem for Barrick Gold was exaggerated by the environmental and social issues in Canada which also made headlines across the world.

Australia can sell most of what they mine for huge profits as they are nonrenewable resources and can be used for many different things including jewellry or petrol. Also hundreds of people in Australia are involved in the mining business so that raises the Australian economy.

China, Australia’s second larges export destination, is a growing economy. The labours in china are really cheap, so a lot of companies set up new manufactures in China and close down manufactures in other countries. A Chinese is satisfied getting 800 yean month, three meals a day and a bed to sleep. There are also people, who are willing to work for even lower labours. So if Australia would have a FTA with china it could profit from the fast growth and development of China. China’s growing manufacturing industry needs large volumes of raw materials, which could be supplied by Australia. “Most Farmers and key agricultural exporters –wool, beef, dairy and grains- have set up their sights

Understanding the fact, that falling commodity prices and rising dollar cannot last indefinitely, and maybe even bottomed out for now, I see a lot of perspectives within these markets in one year period. Moreover, a lot of forecasters expect inflation to move toward two percent goal during this year, which will result in substantial rise in commodity prices. Although, it is a controversial issue according to the FED projections for the current and the next year, which have been lowered from previous numbers (Table#1).

With a GDP of over $1 trillion USD, the Australian economy is among the largest in the world (Cornett and Saunders, 2014). Australia is trading partners with the United States, China, and Japan, but their economic ties are mainly centered in the Pacific Rim. Exports are crucial to the country’s GDP and this has created problems regarding sustainability in the Australian economy.

Since 2012, Australia has maintained a mostly negative trade balance, perhaps amid uncertainty of its currency against the US dollar, but more likely is its economic growth is causing it to import more and more petroleum products which it’s exports of its own natural resources is not able to match.

Gas and oil development plans are branded by huge capital investments. Exploration and production operations incorporate numerous activities, reaching from undertaking geological surveys, finding hydrocarbon resources, and commercially exploiting them. Projects in this area are of a high risk nature in physical trading, and political sense as it is hard to know in advance the presence, degree and value of hydrocarbon resources, as well as production costs and the price oil of oil in the global world market Kaiser, Mark .J (2007)

• Primary commodities have fallen in price, or stayed steady, while commodities they need has increased, e.g. oil