Global Economy Essay

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.

An increase or decrease in the unemployment rate can have a multiple effects on the Australian economy, both beneficial as well detrimental to the economic conditions and the societal outlook.

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.

Those who argue that the ending of mining is not the ending of the economy and that the construction investment could offset the mining sector slump may be misled. They, together with those who assert that the ongoing fiscal and monetary stimulus have ample powers to lift the economy should clearly realise the following: the plunge in mining investment, the down turn in construction industry, the restriction in fiscal and monetary actions all signal that the Australian economy is sliding to sluggish. This low growth condition will continue for several years to come; it seems there is no room for

This increase was largely due to the expansionary fiscal policies that many countries adopted in response to the Global Financial Crisis.” According to estimates, Australia is supposed to minimize debt that is slowly growing by 2018. Australia’s income is slower than what others expected and there has been an increase in unemployment (Carmignani

The trend in unemployment within the Australian economy has swayed significantly in the past 30 years. As of current, the national unemployment rate has been established at 5.8%, after an unexpected downturn from 6% in February of 2016 (“Australia Unemployment Rate | 1978-2016"). Over the past 30 years, the trend of national unemployment has been a downward drop, steadily moving from an approximate 8.2% in 1976 to

Australia has been expanding the economies and becoming the wealthiest nations in the Asia-Pacific regions. The old Labor government use a fiscal policy by increasing the government spending in the Global Recession in 2009. Australia generates the mainly sources of exporting form mining and agriculture, and its services, technologies, and high-value-added manufactured goods are competitive international standard. Australia draws attention to foreign investment with foreign competition and a skillful workforce in almost all industries. The government involves less in the most area of the market and the competition in financial services has increased. Government debt is increasing because of the global financial crisis but it is lower than the

Figure 4.0 depicts how Australian labour productivity has increased significantly over the last two decades, but real wages lag behind significantly. One contributing factor to this could be the profit produced from the increased productivity has not necessarily been redistributed as increased wages for employees. An increase in wages will increase in consumer spending on goods and services as well as better living standards. This increase has the follow-on effect of creating additional labour requirements for the unemployed. Figure 4.1 displays the trend of how the nominal and real wage growth has been slow and even dipped into negative rates.

The unemployment rate has decreased a significant amount. A main cause of this is the government working hard to reduce taxes and regulatory burdens within businesses. The government is also working on improving working conditions. Eric Abetz, the Australian Minister for Employment stated that Australia is, “recognizing that it is businesses which create jobs, not government” (Abetz,14). This shows that the government is focusing on the businesses themselves rather than creating new jobs. With the businesses having success, this will lead to creating more jobs for those unemployed. Australia is encouraging everyone in the country to participate in the labor force as they do everything they can to improve it. In January of 2016, Australia’s unemployment rate was just at 6.4%, and since then it has not hit that high number again. Over the past three years the unemployment rate has taken a full turn around. As of July 2017, it is now at about 5.5%.( Figure 2*) Middle Eastern migrants take up most of the unemployment percentage, they find it very difficult to find jobs in Australia. They have a 33% jobless rate within their five years of living in the country. The unemployment rate for them is around 17.5 %, this is compared to the 3.6% for southeastern Asians and 1.9% for

The article ‘ Strong jobs figures put rate cut in doubt’ described that there is an increase in employment in the last one month which might help in putting hold to rate cut by Reserve Bank of Australia. There are positive signs in Australian job market with increase in 44000 employed people showing signs of recovery and better production levels. This will also increase private consumption giving rise to increased demand.

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

Lately, the government of Australia has seen a good jump in its job market, which made it good

The Victorian economy stands strong with a 4.5% state final demand growth recorded in the year March 2017, outperforming NSW and QLD. Victoria’s growth is being driven majorly by the population growth, growing 2.4% in 2016, outperforming all other states. State labour market conditions have remained positive with 64000 full time jobs created in the year to May 2017. Being stronger than NSW with only 43000 full time jobs created. On the other hand, while having a solid stable labour market it has its flaws, and a retail turnover growth has continued to slow, evidently granting it a 3.6% annual growth recorded in May 2017. While this may the case this was greater than the national growth rate by 0.5% at 3.1%. Looking at the Victorian economy it is most certainly seen as robust due to the diversity and strengths in the financial and professional services sectors.

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.

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