Analyzing the Macroeconomic Performance of Australia

This report analyzes the macroeconomic performance of Australia by evaluating its various macroeconomic indicators such as real GDP growth rate, inflation, unemployment, and exchange rates. It discusses the country's economic performance, its ranking in the Asia-Pacific region, and the factors contributing to its success. The report also provides data on key macroeconomic indicators from 1995 to 2015 and examines the relationship between these indicators. Based on the analysis, the report concludes that Australia's economic performance is good and predicts better results in the future.

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA i
ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA
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ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA ii
Executive Summary
Australia is among the wealthier nations not only in the region of Asia-Pacific but also in the
whole world. It is among the world top richest economies and consists of a large economy which
is a mixed-market in nature (Groenewegen and McFarlane 2014, p.69). The Australian economy
is open in most of its sectors and hence the nation embraces a free economy. In accordance with
the 2019 Index, Australia is ranked position 5 considering the economic freedom performance
with a score of more than 80. The nation has continued to maintain its excellent scores in labor
and trade freedom, fiscal health and government integrity but its efficiency of the judiciary has
declined to some extent as compared to that of the previous years. In terms of economic
performance, Australia has been performing well for the last decade recording positive economic
growth rates though at reduced rates for some years. The nation has shown great resilient to
unfavorable economic conditions and even during the 2008 to 2009 global financial crisis, the
nation was able to keep its economic growth rate positive as compared to many economies
around the world. Considering the Asia-Pacific region, Australia among the 43 nations in the
region, is ranked position 4 in terms of economic performance. The Australian economic
performance has been kept above the expected average performance both at the regional as well
as the world level. This has been possible due to its sound economic policies which foster the
nation’s economic activity and its highly skilled readily available labor force (Courvisanos, Jain
and Mardaneh 2016, p.629). The nation’s viable business environment has continued to attract
many investors into the economy both domestically and internationally (Simon 2010, p.47). This
report has analyzed the Australian economic performance by evaluating its various
macroeconomic indicators which include the real gross domestic product growth rate and the

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA iii
inflation, unemployment and exchange rates. Based on the analyzed macroeconomic indicators,
the Australian economic performance is good and better results are anticipated in the future.

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA iv
Table of Contents
Executive Summary.........................................................................................................................ii
Australian Key Macroeconomic Indicators Data from 1995 to 2015..............................................1
Australian Data on Real GDP Growth Rates, Inflation Rates, Unemployment Rates, Exchange
Rates and Net Exports Data from 1995 to 2015..........................................................................1
Australian Cash Rates and the Federal Reserve Fund’s Rates Data from 1995 to 2015.............2
Australian Real GDP Growth Rates and Inflation Rates Relationship............................................7
Australian Real GDP Growth Rates and Unemployment Rates Relationship..............................10
Australian Net Exports and the Exchange Rates against the US dollar Relationship...................12
Australian Cash Rates and the Federal Reserve Fund’s Rates Relationship.................................14
Economic Explanations Based on the Report................................................................................15
A prediction of the Australian Macroeconomic Outlook..............................................................16
Conclusion.....................................................................................................................................16
References......................................................................................................................................18

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 1
Australian Key Macroeconomic Indicators Data from 1995 to 2015
Australian Data on Real GDP Growth Rates, Inflation Rates, Unemployment
Rates, Exchange Rates and Net Exports Data from 1995 to 2015
The Real GDP data has been obtained from the “International Monetary Fund
(https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD),
Inflation Rates from International Monetary Fund
(https://www.imf.org/external/datamapper/PCPIPCH@WEO/OEMDC/AUS), Unemployment Rates
from International Monetary Fund
(https://www.imf.org/external/datamapper/LUR@WEO/OEMDC/ADVEC/WEOWORLD), Exchange
Rates from World Bank (https://data.worldbank.org/indicator/pa.nus.fcrf), and Net Exports from
World Bank (https://data.worldbank.org/indicator/BN.GSR.GNFS.CD?view=chart)”.
Year
Real GDP
Growth Rate
(Annual %)
Inflation
Rates (Annual
%)
Unemployment
Rate (Annual %)
Exchange
Rate against
the US Dollar
Net Exports
Value ($)
1995 2.8 4.6 8.5 1.35 -5240428241
1996 4.2 2.7 8.5 1.28 -533267382.7
1997 4.6 0.2 8.4 1.35 1646368836
1998 4.7 0.9 7.7 1.59 -6467569674
1999 4.4 1.4 6.9 1.55 -10082425327
2000 3 4.5 6.3 1.72 -4278715480
2001 2.6 4.4 6.8 1.93 2098010276
2002 4.2 3 6.4 1.84 -4719220381
2003 2.7 2.7 5.9 1.54 -14416671533
2004 4.3 2.3 5.4 1.36 -19188702455
2005 2.9 2.7 5 1.31 -14812982447
2006 2.8 3.6 4.8 1.33 -12281113878
2007 4.4 2.4 4.4 1.20 -22837087761
2008 2.7 4.3 4.3 1.19 -13745224204
2009 1.9 1.8 5.6 1.28 -10035658716
2010 2.4 2.9 5.2 1.09 6185600684
2011 2.8 3.4 5.1 0.97 12563182829
2012 3.9 1.7 5.2 0.97 -21442502739
2013 2.1 2.5 5.7 1.04 -7420878112
2014 2.6 2.5 6.1 1.11 -9083612608

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 2
2015 2.5 1.5 6 1.33 -27769803392
Australian Cash Rates and the Federal Reserve Fund’s Rates Data from
1995 to 2015
The data has been obtained from “FRED Economic Data
(https://fred.stlouisfed.org/series/FEDFUNDS) and the Reserve Bank of Australia
(https://www.rba.gov.au/statistics/cash-rate/)” on a monthly basis percentage
Year Australia United States
1995-01-01 7.5 5.53
1995-02-01 7.5 5.92
1995-03-01 7.5 5.98
1995-04-01 7.5 6.05
1995-05-01 7.5 6.01
1995-06-01 7.5 6.00
1995-07-01 7.5 5.85
1995-08-01 7.5 5.74
1995-09-01 7.5 5.80
1995-10-01 7.5 5.76
1995-11-01 7.5 5.80
1995-12-01 7.5 5.60
1996-01-01 7.5 5.56
1996-02-01 7.5 5.22
1996-03-01 7.5 5.31
1996-04-01 7.5 5.22
1996-05-01 7.5 5.24
1996-06-01 7.5 5.27
1996-07-01 7.5 5.40
1996-08-01 7 5.22
1996-09-01 7 5.30
1996-10-01 7 5.24
1996-11-01 6.5 5.31
1996-12-01 6 5.29
1997-01-01 6 5.25
1997-02-01 6 5.19
1997-03-01 6 5.39
1997-04-01 6 5.51
1997-05-01 5.5 5.50
1997-06-01 5.5 5.56
1997-07-01 5 5.52
1997-08-01 5 5.54
1997-09-01 5 5.54
1997-10-01 5 5.50
1997-11-01 5 5.52
1997-12-01 5 5.50

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 3
1998-01-01 5 5.56
1998-02-01 5 5.51
1998-03-01 5 5.49
1998-04-01 5 5.45
1998-05-01 5 5.49
1998-06-01 5 5.56
1998-07-01 5 5.54
1998-08-01 5 5.55
1998-09-01 5 5.51
1998-10-01 5 5.07
1998-11-01 5 4.83
1998-12-01 4.75 4.68
1999-01-01 4.75 4.63
1999-02-01 4.75 4.76
1999-03-01 4.75 4.81
1999-04-01 4.75 4.74
1999-05-01 4.75 4.74
1999-06-01 4.75 4.76
1999-07-01 4.75 4.99
1999-08-01 4.75 5.07
1999-09-01 4.75 5.22
1999-10-01 4.75 5.20
1999-11-01 5 5.42
1999-12-01 5 5.30
2000-01-01 5 5.45
2000-02-01 5.5 5.73
2000-03-01 5.5 5.85
2000-04-01 5.75 6.02
2000-05-01 6 6.27
2000-06-01 6 6.53
2000-07-01 6 6.54
2000-08-01 6.25 6.50
2000-09-01 6.25 6.52
2000-10-01 6.25 6.51
2000-11-01 6.25 6.51
2000-12-01 6.25 6.40
2001-01-01 6.25 5.98
2001-02-01 5.75 5.49
2001-03-01 5.5 5.31
2001-04-01 5 4.80
2001-05-01 5 4.21
2001-06-01 5 3.97
2001-07-01 5 3.77
2001-08-01 5 3.65
2001-09-01 4.75 3.07
2001-10-01 4.5 2.49
2001-11-01 4.5 2.09
2001-12-01 4.25 1.82
2002-01-01 4.25 1.73

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 4
2002-02-01 4.25 1.74
2002-03-01 4.25 1.73
2002-04-01 4.25 1.75
2002-05-01 4.5 1.75
2002-06-01 4.75 1.75
2002-07-01 4.75 1.73
2002-08-01 4.75 1.74
2002-09-01 4.75 1.75
2002-10-01 4.75 1.75
2002-11-01 4.75 1.34
2002-12-01 4.75 1.24
2003-01-01 4.75 1.24
2003-02-01 4.75 1.26
2003-03-01 4.75 1.25
2003-04-01 4.75 1.26
2003-05-01 4.75 1.26
2003-06-01 4.75 1.22
2003-07-01 4.75 1.01
2003-08-01 4.75 1.03
2003-09-01 4.75 1.01
2003-10-01 4.75 1.01
2003-11-01 5 1.00
2003-12-01 5.25 0.98
2004-01-01 5.25 1.00
2004-02-01 5.25 1.01
2004-03-01 5.25 1.00
2004-04-01 5.25 1.00
2004-05-01 5.25 1.00
2004-06-01 5.25 1.03
2004-07-01 5.25 1.26
2004-08-01 5.25 1.43
2004-09-01 5.25 1.61
2004-10-01 5.25 1.76
2004-11-01 5.25 1.93
2004-12-01 5.25 2.16
2005-01-01 5.25 2.28
2005-02-01 5.25 2.50
2005-03-01 5.5 2.63
2005-04-01 5.5 2.79
2005-05-01 5.5 3.00
2005-06-01 5.5 3.04
2005-07-01 5.5 3.26
2005-08-01 5.5 3.50
2005-09-01 5.5 3.62
2005-10-01 5.5 3.78
2005-11-01 5.5 4.00
2005-12-01 5.5 4.16
2006-01-01 5.5 4.29
2006-02-01 5.5 4.49

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 5
2006-03-01 5.5 4.59
2006-04-01 5.5 4.79
2006-05-01 5.75 4.94
2006-06-01 5.75 4.99
2006-07-01 5.75 5.24
2006-08-01 6 5.25
2006-09-01 6 5.25
2006-10-01 6 5.25
2006-11-01 6.25 5.25
2006-12-01 6.25 5.24
2007-01-01 6.25 5.25
2007-02-01 6.25 5.26
2007-03-01 6.25 5.26
2007-04-01 6.25 5.25
2007-05-01 6.25 5.25
2007-06-01 6.25 5.25
2007-07-01 6.25 5.26
2007-08-01 6.5 5.02
2007-09-01 6.5 4.94
2007-10-01 6.5 4.76
2007-11-01 6.75 4.49
2007-12-01 6.75 4.24
2008-01-01 6.75 3.94
2008-02-01 7 2.98
2008-03-01 7.25 2.61
2008-04-01 7.25 2.28
2008-05-01 7.25 1.98
2008-06-01 7.25 2.00
2008-07-01 7.25 2.01
2008-08-01 7.25 2.00
2008-09-01 7 1.81
2008-10-01 6 0.97
2008-11-01 5.25 0.39
2008-12-01 4.25 0.16
2009-01-01 4.25 0.15
2009-02-01 3.25 0.22
2009-03-01 3.25 0.18
2009-04-01 3 0.15
2009-05-01 3 0.18
2009-06-01 3 0.21
2009-07-01 3 0.16
2009-08-01 3 0.16
2009-09-01 3 0.15
2009-10-01 3.25 0.12
2009-11-01 3.5 0.12
2009-12-01 3.75 0.12
2010-01-01 3.75 0.11
2010-02-01 3.75 0.13
2010-03-01 4 0.16

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 6
2010-04-01 4.25 0.20
2010-05-01 4.5 0.20
2010-06-01 4.5 0.18
2010-07-01 4.5 0.18
2010-08-01 4.5 0.19
2010-09-01 4.5 0.19
2010-10-01 4.5 0.19
2010-11-01 4.75 0.19
2010-12-01 4.75 0.18
2011-01-01 4.75 0.17
2011-02-01 4.75 0.16
2011-03-01 4.75 0.14
2011-04-01 4.75 0.10
2011-05-01 4.75 0.09
2011-06-01 4.75 0.09
2011-07-01 4.75 0.07
2011-08-01 4.75 0.10
2011-09-01 4.75 0.08
2011-10-01 4.75 0.07
2011-11-01 4.5 0.08
2011-12-01 4.25 0.07
2012-01-01 4.25 0.08
2012-02-01 4.25 0.10
2012-03-01 4.25 0.13
2012-04-01 4.25 0.14
2012-05-01 3.75 0.16
2012-06-01 3.5 0.16
2012-07-01 3.5 0.16
2012-08-01 3.5 0.13
2012-09-01 3.5 0.14
2012-10-01 3.25 0.16
2012-11-01 3.25 0.16
2012-12-01 3 0.16
2013-01-01 3 0.14
2013-02-01 3 0.15
2013-03-01 3 0.14
2013-04-01 3 0.15
2013-05-01 2.75 0.11
2013-06-01 2.75 0.09
2013-07-01 2.75 0.09
2013-08-01 2.5 0.08
2013-09-01 2.5 0.08
2013-10-01 2.5 0.09
2013-11-01 2.5 0.08
2013-12-01 2.5 0.09
2014-01-01 2.5 0.07
2014-02-01 2.5 0.07
2014-03-01 2.5 0.08
2014-04-01 2.5 0.09

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 7
2014-05-01 2.5 0.09
2014-06-01 2.5 0.10
2014-07-01 2.5 0.09
2014-08-01 2.5 0.09
2014-09-01 2.5 0.09
2014-10-01 2.5 0.09
2014-11-01 2.5 0.09
2014-12-01 2.5 0.12
2015-01-01 2.5 0.11
2015-02-01 2.25 0.11
2015-03-01 2.25 0.11
2015-04-01 2.25 0.12
2015-05-01 2 0.12
2015-06-01 2 0.13
2015-07-01 2 0.13
2015-08-01 2 0.14
2015-09-01 2 0.14
2015-10-01 2 0.12
2015-11-01 2 0.12
2015-12-01 2 0.24
Australian Real GDP Growth Rates and Inflation Rates Relationship
The real GDP measures a nation’s total economic output over a given period of time taking into
account the inflation level prevailing in the nation over the time period under consideration
which is mostly on an annual basis (Aastveit et al 2014, p.48). It is mostly used when evaluating
a nation’s economic performance as compared to the nominal GDP since it gives accurate data
than the nominal GDP. It is also known as the inflation-corrected GDP. The real GDP growth
rate is an indication of the rate at which an economy grows over a given period of time (Mariano
and Murasawa 2010, p.27).
The inflation rate is an indication of the rate at which the general price for goods and services in
a given nation increase considering a given period of time which is used considered to be one
year (Ciccarelli and Mojon 2010, p.524). Inflation has a direct proportionality relationship with a
nation’s economic growth. This, therefore, means that an increase in inflation rate is coupled by
an increase in a gross domestic product though sometimes an inverse relationship occurs

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 8
between a nation’s real GDP growth rates and inflation rates (Nunes 2010, p.1161). The
summary statistics for the Australian real GDP growth rates and the inflation rates are shown
below.
Inflation Rates (Annual %)
Real GDP Growth Rate (Annual
%)
Mean 2.67 3.26
Standard Error 0.26 0.20
Median 2.70 2.80
Mode 2.70 2.80
Standard Deviation 1.19 0.91
Sample Variance 1.42 0.83
Skewness -0.05 0.36
Range 4.40 2.80
Minimum 0.20 1.90
Maximum 4.60 4.70
Sum 56 68.5
Count 21 21
The graph for the data is shown below.
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Inflation Rates (Annual %)
Real GDP Growth Rate (Annual
%)
Year
Inflation and Real GDP growth Rates

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 9
From the summary statistics and the graph, it is clear that the Australian real GDP growth rates
and the inflation rates have an inverse relationship. This means that an increase in inflation leads
to a decline in the real GDP growth rate. From the summary statistics, the lowest inflation rate of
0.2 percent during the year 1997 matches with a higher real GDP growth rate of 4.6 percent
while the highest inflation rate of 4.6 percent during the year 1995 matches with a lower real
GDP growth rate of 2.8 percent. Also from the graph, during the years 1997 and 1998, when
Australia had the lowest inflation rates of 0.2 and 0.9 percent respectively, the nation had higher
real GDP growth rates of 4.6 and 4.7 percent respectively.
From the data on the Australian real GDP growth rates and inflation rates comparison, it is clear
that there is a business cycle. For example, during the year 1997 and 1998 when inflation rates
were 0.2 and 0.9 respectively, the economy of Australia was at its peak with higher real GDP
growth rates of 4.6 and 4.7 percent. Also when the nation was experiencing the great global
financial crisis during the recession period of 2008/2009, it can be seen that the Australian
inflation rates declined from 4.3 to 1.9 percent respectively to counter the economic recession
(Laeven and Valencia 2013, p.147).
Australian Real GDP Growth Rates and Unemployment Rates
Relationship
Unemployment results when a person who is able and willing work seeks for job placement but
does not find it (Shimer 2012, p.127). Unemployment and the real GDP of a given nation relate
to each other inversely. This is the case for the two Australian indicators (the real GDP growth
rates and the unemployment rates). This means that as the real GDP growth rate increase then

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 10
unemployment rate decreases on the other hand (Ball, Jalles and Loungani 2015, p.176). The
summary statistics for the two indicators are shown below.
Unemployment Rate (Annual %) Real GDP Growth Rate (Annual %)
Mean 6.10 3.26
Standard Error 0.28 0.20
Median 5.90 2.80
Mode 8.50 2.80
Standard Deviation 1.29 0.91
Sample Variance 1.66 0.83
Skewness 0.70 0.36
Range 4.20 2.80
Minimum 4.30 1.90
Maximum 8.50 4.70
Sum 128.2 68.5
Count 21 21
The graph for the two indicators is shown below.
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
0
1
2
3
4
5
6
7
8
9
Unemployment Rate (Annual %)
Real GDP Growth Rate (Annual
%)
Year
Unemployment and Real GDP growth rates
Based on the obtained summary statistics and graph, the Australian real GDP growth rates and
the unemployment rates are related to each other inversely. For example, during the years 1995
to 1998 when the Australian real GDP growth rates were increasing, the unemployment rates

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 11
were declining (Healy 2014, p.345). Also, the maximum unemployment rate from the summary
statistics of 8.5 percent during the year 1995 corresponds to a lower real GDP growth rate of 2.8
percent.
From the summary statistics and the graph, there is clear evidence of the business cycle. From
the years 1995 to 1998, when the Australian real GDP growth was growing, the unemployment
rate was declining (Blanchard and Galí 2010, p.1). Also, from the year 2008 to 2009, when the
Australian real GDP declined from 2.7 to 1.9 percent, the unemployment rate increased
(McDonald and Morling 2011, p.1) from 4.3 to 5.6 percent respectively.
Australian Net Exports and the Exchange Rates against the US dollar
Relationship
A nation’s value obtained when its total imports are subtracted from its total exports is known as
the net exports or the balance of payment. Net exports indicate whether a nation has a trade
deficit or surplus (Taylor, Basu and McLean 2011, p.444). When a nation experiences a trade
deficit, it is said to have an unfavorable balance of payments while if it experiences a trade
surplus, it is said to have a favorable balance of payments. Net exports and exchange rates have
an inverse relationship. This means that a decrease in a nation’s currency value leads to an
increase in net exports and vice versa. The summary statistics for Australian net exports and
exchange rates are shown below.
Exchange Rate Net exports ($)
Mean 1.35 -8660128652.57
Standard Error 0.06 2163585077.29
Median 1.33 -9083612608.35
Standard Deviation 0.27 9914792389.15
Sample Variance 0.07 98303108119864700000.00
Skewness 0.64 0.13

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 12
Range 0.97 40332986221.05
Minimum 0.97 -27769803392.14
Maximum 1.93 12563182828.91
Sum 28.33 -181862701703.98
Count 21 21
The graph for the Australian net exports is shown below.
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
-30000000000
-25000000000
-20000000000
-15000000000
-10000000000
-5000000000
0
5000000000
10000000000
15000000000
Net ExportsValue ($)
Value ($)
Year
Net export value ($)
The data for the exchange rates are graphed below.

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 13
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
0.00
0.50
1.00
1.50
2.00
2.50
Exchange Rate against the US dollar
Exchange Rate
Year
Exchange Rate
From the summary statistics and the graphs, the Australian exchange rates have an inverse
relationship with its net exports. For example, when the nation had the lowest and favorable
exchange rates of 0.97 against the US dollar during the year 2011, the nation’s net exports were
favorable at 12563182829 and this was a trade surplus. This is because depreciation in a nation’s
currency makes its exports cheaper while imports are made expensive (Reddy 2019, p.29). As a
result, more exports are sold as compared to imported goods and services.
Australian Cash Rates and the Federal Reserve Fund’s Rates
Relationship
The Australian Reserve Bank has the mandate of setting the nation’s cash rates every month
except January which uses the December previous year’s set cash rates. The Australian interest
rates are based on the set cash rates (Smales 2012, p.793). The Federal Reserve Fund’s rates are
the United States interest rates which are charged by banks as they lend each other (Chuliá,

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 14
Martens and van Dijk 2010, p.834). The US interest rates are determined by it's Federal Reserve
Fund’s rates. The summary statistics for the two indicators have been shown below.
Australia United States
Mean 4.91 2.72
Standard Error 0.09 0.15
Median 5.00 2.00
Mode 4.75 0.09
Standard Deviation 1.47 2.37
Sample Variance 2.16 5.60
Skewness -0.14 0.15
Range 5.5 6.47
Minimum 2 0.07
Maximum 7.5 6.54
Sum 1237 686.58
Count 252 252
The data for the two indicators have been graphed below.
1995-01-01
1996-02-01
1997-03-01
1998-04-01
1999-05-01
2000-06-01
2001-07-01
2002-08-01
2003-09-01
2004-10-01
2005-11-01
2006-12-01
2008-01-01
2009-02-01
2010-03-01
2011-04-01
2012-05-01
2013-06-01
2014-07-01
2015-08-01
0
1
2
3
4
5
6
7
8
Australia
United States
From the summary statistics and the graph, the Federal Reserve Fund’s rates are lower than the
Australian cash rates. The higher Australian cash rates match with higher Federal Reserve
Fund’s rates and the minimum Australian cash rates match with the minimum Federal Reserve

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 15
Fund’s rates. This indicates that a move by the Federal Reserve Fund’s rates results to a similar
move by the Australian cash rates.
Economic Explanations Based on the Report
The goal of every nation is to have better economic growth at all times. This is possible by the
nation adopting sound economic policies considering the economy’s business cycle. Australia
has been using its fiscal and monetary policies to maintain its better economic growth
(Cimadomo 2012, p.440). For example, during the economic recession which resulted from the
great 2008/2009 world financial crisis, Australia used its monetary policy and lowered its cash
rates from 7.25 to 3 percent from 2008 to 2009 to counter the economic recession which resulted
to the nation’s lower real GDP growth rate (Davig and Doh 2014, p.862). The nation’s fiscal
policy was also used as the Australian government increased its spending (Johnson 2013, p.94).
The combination of the two policies enabled the nation to reduce its trade deficit from $-
13745224204 to $-10035658716 during the years 2008 and 2009 respectively. The applied
policies led to the depreciation of the Australian (Stevens 2013, p.21) from 1.19 to 1.28 percent
from 2008 to 2009.
A prediction of the Australian Macroeconomic Outlook
From the analyzed data, graphs and the summary statistics, the macroeconomic outlook of
Australia is expected to be better. The Reserve Bank of Australia has kept cash rates low in order
to foster the nation’s economic growth (Fraser, Macdonald and Mullineux 2014, p.1419). The
real gross domestic product of Australia from the analyzed data is expected to increase. The
Australian expansionary monetary and fiscal policies are likely to cause an increase in the
nation’s inflation rate (Faust and Wright 2013, p.2). The unemployment rate is anticipated to

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 16
decrease as the Australian economy is expanding and more job opportunities are being created
(Berentsen, Menzio and Wright 2011, p.371). The overall Australian economic performance is
likely to increase in the future.
Conclusion
Australia is among the richest nations not only in the region of the Asia-Pacific but also in the
whole world. Various macroeconomic indicators of Australia have been analyzed in this report.
The monetary and fiscal policies in Australia have been used to counter economic problems such
as the 2008/2009 global financial crisis and maintain the nation’s better economic growth. The
results show that the Australian economy is anticipated to perform in economic growth. This is
an indication of a favorable investment climate to the interested investors and businesses.

ANALYZING THE MACROECONOMIC PERFORMANCE OF AUSTRALIA 17
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