The Impact Of Online Retail On Australian Gdp

1324 Words6 Pages
Introduction Recently in Australia, online retail has appeared as a major threat to brick-and-mortar (physical) retailers, with online retail spending growing at a faster rate each year, and physical retail spending growing at a slower rate. According to the online retail sales index for the National Australia Bank (NAB), in December 2013, the online retail sales growth rate had expanded by 1.58% from November 2013, while domestic brick-and-mortar retailers retained their 0.6% growth rate from the previous month. This growth in online spending has the potential to cause a fall in the growth of Australian Gross Domestic Product (GDP). GDP can be defined as the market value of all final goods and services that a country produces over a…show more content…
Investigating Australia’s GDP in relation to both Physical and Online Retail The online retail sales index cited earlier indicates that while both online and physical retailers are growing, physical retailers are growing at a slower rate, suggesting that Australian consumers are spending an increasingly greater amount of their income on online retail, causing it to account for a greater percentage of consumer spending. Consumer spending is any spending undertaken by households on final goods and services. However, as during January 2014, the retail site most visited by Australian consumers was Amazon, it is reasonable to believe that the majority of Australian consumer’s online retail spending is not being spent on Australian goods. Assuming Australian consumers are mostly importing online goods from sites such as Amazon, net exports (the amount of goods exported from Australia minus the amount of goods imported from Australia) would fall, as while the quantity of goods exported by Australian firms remains essentially constant, imports have increased. Indeed, consumer spending on domestic goods would also fall for the same reasons. As these are both determinants of aggregate demand for Australia’s Gross Domestic Product, or GDP, a fall in consumer spending and net exports would be likely to cause a fall in aggregate demand, or the total amount of real output that consumers, firms, the government and foreigners want to buy at each possible price
Open Document