Explain How Australian Economy Will Remain

After the deepest recession in the world economy following the Global Financial Crisis, the whole economy operated under a loose monetary policy. The starter was the three-round quantitative easing announced by the US Federal Reserve, and then followed by the European Central Bank and the bank of England. Despite the QE, most central banks started reduction of interest rate. On Mar 3rd, the Reserve Bank of Australia announced a cut in the cash rate by 25 basis points to 1.75 per becoming the lowest cash rate in history. The purpose of this research essay is to analyze and discuss how such monetary policy will influence the Australia economy. The focus of my analysis will be divided into three areas, the impact on inflation

This Business Report studies the impact of the Brexit vote in Europe on Australia’s economy. It examines the changes of the economic variables consumption expenditure, government spending, investment and net exports due to the arisen uncertainty by the recent events. Furthermore, an outlook is given on how these variables are expected to change over the next six months. Based on the findings that the economic variables are going to decrease, GDP is anticipated to drop to a lower level accordingly. It is therefore proposed that the Senior Management Team lowers the cash rate in order to facilitate the growth of Australia’s economic variables.

In the past decade, Australia’s productivity growth, the main driver of growth in income in 1990s, has not only slowed down but also fell below its long-run average as shown in Chart 1 below (OECD, 2012).

Australian economy as a whole remains cautiously optimistic, due to the Euro zone sovereign debt-related issues and lack-lustre American economic performance. Strong financial and mining sectors offset weaker retail and manufacturing performance. Unemployment rate remains fewer than

the GDP growth of Australia indicates an overall downward trend from 2012 to 2015, which from about 4% in 2012 to approximate 2% in 2015. The main reason may be the decline of global commodity prices so business spending and export earnings stagnate. Specifically, the importance of iron ore to the Australian economy is self-evident.

Australia has over the last four years resisted the impending decline of economic recession as a result of the Euro crisis (Parkinson, 2011). Following the US sub-prime aggravated the global financial crisis as it defiantly causes an economic recession in most of

Economic growth is an increase in the volume of goods and services that an economy produces over a period of time and is measured by the annual rate of change in real Gross Domestic Product (GDP). Economic growth is classified as one of the most important indicators of an economy’s performance. Australia has maintained an average of 3.3% real GDP growth since 1992. The pursuit of a stable economic growth is a major objective of government policy, however, the optimal rate of economic growth varies due to its impacts on unemployment and inflation.

The Australian economy, just like all other economies around the world goes through a cycle which lasts on average ten years and consists of periods of peaks as well as downturns. (Refer to Diagram 3.1 )

This report will examine the components of aggregate expenditure and assess their influence on the performance of the Australian economy over the last five years. Australia 's current economic performance will then be evaluated within the context of the business cycle and further analysed using aggregate demand, aggregate supply and the output gap. The monetary and fiscal policy implications of Australia 's current economic position are also briefly explored.

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).

There has been moderate economic growth in the Australian market. Statistics for the year 2014 indicate that there was a moderate increase in the pace of consumer spending (RBA, 2015). There has also been a decline in unemployment rates to 5.75%. There has also been a decline in the number of employees anticipating to lose their jobs. There has been a growth in consumption for the September quarter of 2015, as well as growth in retail sales (RBA, 2016). The pace of growth of consumption has been sustained.

In Australia the use of fiscal and monetary policies are implemented to achieve a steadily growing and stable economy. The main features to achieving the macroeconomics objectives are fiscal policy, monetary policy and floating the exchange rate. Macroeconomics looks at the economy as a whole and these policies are used and manipulated due to the current state of the economy. The four main macroeconomic objectives are full employment, external balance, economic growth and price stability. The changes to rates and implementations from the Government will be documented in terms of months. Not all rates change monthly (eg. GDP presented quarterly) but all trends such as unemployment and expenditure and analysed in time brackets of months

In order to assess where the Australian economy is in the business cycle, it is necessary to examine to the main expenditure components – household consumption, net investment which includes inventories along with private and public investment, government expenditure, and net exports (Makin, 2010, p. 9). Figure 1 illustrates the growth rate of real GDP of the past five years seasonally adjusted, while figure 2 shows the growth rate segmented into the components that cause GDP growth. There are a number of trends that these graph illustrate, and it is important understand their effect on aggregate demand.

“Australia’s economic growth appears to be losing momentum, with promising signs of recovery in the economy now waning, says

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.