Economics Variables : Economic Outlook

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2. Marco Economics Variables 2.1 Australian GDP Figure xx: Source: IMF World Economic Outlook (WEO), April 2015 Figure xx: Australian GDP Growth 2010 – 2015 (ABS 2015) GDP Trend Analysis “Real GDP is the value of all final goods produced in a given time period based on the prices existing in a selected base year” (Layton et al 2012, p.255) and is used as a worldwide measure across different economies. Referred to prices from base year. Real GDP is the preferred method as the economy can be compared via GDP growth rates. GDP drop to 2.3 percent in the June quarter from a year earlier in which growth has fallen short of potential growth (3.5 percent). The economy has been below trend for since August 2012. The factors constitute the…show more content…
Yet its economic success in recent years has been based on the mining sector (13.5 percent of GDP) as foreigners paid more each year for key commodity exports, triggering huge investment in resources infrastructure (References). Contribution of Annual growth of household to GDP Growth 2.2 Inflation and CPI CPI as the measuring indicator of inflation is important to almost every part of the economy and monetary policy decisions (Boskin et al. 1998). CPI trend is the important as it is a constant utility price index (Bryan & Cecchetti 1993). During the specific period (in Australia is six years), the basket of goods and services remains the same to ensure consistency in understanding costs of living increases. Australian Bureau of Statistics (ABS) has published CPI in 2011 as 16th series which shows compiling price indexes over the specific two periods. There are various biases in regards to the CPI calculations but it is not important which formula is being used as it is important that consistency of the items included i.e. index domain. The full list of the all groups and expenditure classes can be seen in Appendix 1. Table: June Ket Figures – ABS 2015 ( Figure xx – Inflation over the long run – Source: RBA 2015 Trend Analysis Inflation targeting provides high degree of clarity and responsibility allowing reserve bank not to deviate from the systematic and rational monetary policy
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