The Economic Conditions And Financial Reporting Requirement Of Thomson Ltd Essay

Economic growth measures a percentage change in the GDP of an economy over a period of time. China and Australia’s GDP growth rates are very different, China having a relatively high GDP growth rate, while Australia’s is only just between the target 2-3%. In

The Australian economy expanded 0.5% in the June quarter of 2016, slowing from a downward 1.0% growth in the previous quarter and slightly below market consensus of a 0.6% growth. It was the weakest expansion since the second quarter 2015, weighed down by net trade while investment was flat and final consumption remained steady. Through the year, the economy grew by 3.3%, accelerating from a 3.1% in the March quarter, which is the strongest expansion since the June quarter 2012, bringing the annual growth of 2.9% for the 2015-2016 financial year and going 100 quarters without experiencing a

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.

Australia has also experienced a rising terms of trade to 130.0 in late 2011 due to the commodities boom as a result of the industrialization of the BRICs, whereby Australia has experienced high export and national income, but has resulted in less competitiveness in other sectors due to the high AUD, causing the ‘Dutch disease’ whereby non-commodity sectors lose competitiveness. Similarly is can be seen in its narrow export base whereby in 2012-13 one third of export revenue came from coal and iron ore ($96 billion from 300 billion), furthermore 57% of Australian export revenue is made up of mineral and energy exports, whereby Australian growth has been largely fuelled by commodity exports and mining boom.

The Australian PMI has been mostly below 50 with an average of 47.98 in past 12 months and an average of 47.94 this year, which suggests a likely contraction in manufacturing. Fluctuation is expected due to its volatile nature but a large percentage change is likely to drive the economy. A 14.03% growth in July is expected to lead to an increase in the coming month but contraction may continue in 2015-2016. From these PMI figures, Australia’s economy might not be performing at its best. The industry might suffer

This growth rate was primarily driven by high consumer spending supported by both government spending and rising employment levels. According to a report by the Australian Bureau of statistics, consumer spending contributed to two thirds of GDP growth in the fourth quarter. This came despite a fall in income levels as Australian residents used their savings for spending purposes, and was also helped by a booming real estate sector which was the largest contributor to the GDP growth in the fourth quarter. (Mehta, 2016). As can be seen in Fig.4 below, consumer spending in australia increased to 231332 million in the last qtr of 2015 from 229576 million in the third qtr of 2015.

The benchmark investment rate in Australia was last recorded at 2.25%. Investment Rate in Australia found the middle value of 5.13 percent from 1990 until 2015, arriving at an unequaled high of 17.50 percent in January of 1990. Inflation Rate in Australia averaged 5.21 percent from 1951 until 2014. Customer costs in Australia rose 1.7% during the time to the December quarter 2014, the slowest yearly pace in more than two years as petrol costs dove. Australian yearly inflation rate abated to 2.3% in the second from last quarter of 2014 from 3.0 % in the past period, determined by a fall in cost of electricity, after the removal of tax duty on carbon discharge beginning early July. An alternate key variable that impacts the business is the unemployment rate. While the unemployment is staying high it is normal that RBA will keep the investment rates and trade rates low. Unemployment Rate in Australia diminished to 6.30% in February of 2015 from 6.40% in January of 2015. Unemployment Rate in Australia found to be in between 6.91% from 1978 until

It is said that we are living in turbulent times. The Australia’s once-in-a-century commodity boom has reversed, leading many miners to cut back on investments and consolidate; which is expected to generate great social and economic hardship throughout these years. While more hope is casted into the construction sector, a cooling change blows in the housing market. Unemployment is tipped to rise and when it reaches a record high; consumption will continue to grow at a below-average pace, so business sentiment will remain fragile. Rather than fuelling the economy, the fiscal policy keeps straining it whilst the monetary policy will struggle to have an impact – indicating that the Australian economy is slipping downwards.

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 Australian dollar has slowed down but has not gone into a time period where people and businesses make less money. The dollar is not in as much trouble as we think. Macroeconomic indicators, including GDP (Gross Domestic Products), unemployment and inflation, has Australia placed among the top compared to other countries who aren’t doing so well. Our GDP has been growing steady pace. (Mark Mulligan, July 8, 2015)

The main issue in the article is the decline of Australian dollar against the US dollar. Upon perusing it is understood that the Australian dollar is steadily declining during the current year. The economists said that this is due to the fall of commodity prices globally. The Australia is agriculture and resource based economy, and the Australian dollar heavily depends on commodity price and terms of trade. According to IMF the reason for the falling commodity prices is the slowing of demand globally. It’s mentioned that Australia, Canada and New Zealand are the three of the worst performing currencies of 2015. In order to stimulate economy the Reserve Bank of Australia is planning to cut its rate to 1.5% before March 2016 to deal with lower GDP and low domestic demand that is increasing unemployment. Mining investment has slowed down which reduced the value of iron ore causing Capital imports to fall in Australia. If the dollar declines too far then Australia’s import will be reduced and this is difficult for businesses. Another nail in the coffin for Australian economy is the plan to raise the rates of UK and US which could further decline the value of AUD.

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).

There are three major economic factors that have combined contribution to FMG’s growth over the past 5 years, including the strong AUD , the amazing export feature due to the Chinese boom which drives up the commodity price and the interest rate decision by RBA. Australia dollar has appeared strong for the past 5 years and maintained at $6-$6.8 level for AUD/CNY at most time. It promised a high level of foreign income for Australia exporter. In 2009, China demanded almost 60% of the world’s iron ore to produce 47% of world’s steel production. It contributes the most to the price rocket from $31.78 to $180.6 US cents/mts in 5 years time. In addition, Australia borrowing cost remains high over the past few years which may alter the finance decisions of FMG.

Economic growth can be defined as the Gross Domestic Product (GDP) of a country increasing. Economic growth in Australia is a reflection of its capacity to intensify it production of goods and services and its nominal GDP is typically attuned for inflation

Economic Growth refers to a nation’s outputs of goods and services over time. It is measured in terms of Gross Domestic Product (GDP) which is a valuation of a country’s total production in a year. In 2007-08, Australia had a GDP growth rate of 3.7%. By 2012, this growth rate had dropped to 3.1% despite the 20 years of continual economic growth in Australia averaging 3.5% up until 2012. Recent economic growth has been largely supported during the global resources boom where there was strong demand and increasing commodity prices of Australia’s mineral resources such as iron ore, coal, aluminium, copper and zinc. However, even though Australia has a very dynamic and developed economy there are still