GDP and Economic Growth in Australia in the Last Five Years

GDP AND ECONOMIC GROWTH IN AUSTRALIA IN THE LAST FIVE YEARS

Introduction :
The Australian economy is an advanced economy and Australia also ranks within the G10 of the
world countries which is in no small way due to its feats as such a highly developed economy. By
nominal standards it ranks 13th in the world in terms of GDP while in terms of purchasing power
parity it ranks 19th in the world as of 2017 (Data.worldbank.org, 2018). It also has has the second
largest wealth per capita in the world, second only to Switzerland. It also has flourishing trade with
it being one of the highest exporters and importers helping the economy grow. It also has shown
brilliant performance regarding growth and has had a period of continuous growth from the last
recession in July 1991.
The backbone of the Australian economy is the service sector employing the majority of the
workforce and also contributes most highly towards GDP. At the height of the mining boom that
happened in Australia, mining went to contribute about 8.4% of the GDP of Australia. Though it
has since decreased, mining continues to be one of the more labour intensive sectors employing a
large sector of people. Another one of the main sectors of the Australian economy is
manufacturing. Though it has seen a steady decline over the years with many companies such as
Mitsubishi and Ford shutting down there companies down under, it still remains as a major
contributor to the GDP. Another is agriculture which contributes around 3% when taken at just the
production of crop levels but taking into scope the by products and such it has a much larger
contribution to GDP. Lastly there is Financial industry and the tourism industry which also puts in.
Fair share towards the GDP. In the following section, we will have a look at how GDP and then
these components of the contribution to GDP has changed through the last 5 years.
Components of the economy:
The GDP for Australia in nominal terms and when presented as in international dollars has been
steadily increasing in the last 5 years. There is no downturn and the upward trend look robust. The
same is true for the GDP per capita and as has seen a constant upward trend in the last five years.
Due to the population also steadily increasing the last 5 years there might have been a chance that
GDP per capita would have stagnated but what this indicates is that the growth in GDP was higher
than the growth in population. (Scutt, 2018) As for the rate of growth of the Gap which is taken as a
proxy for the rate of growth of the Australian economy it is at present showing an upward trend.

From 2012 to 2013 there was steep decline in the growth rate mainly fostered by the pull back in
capital expediter seen during the year. Also at the time while the manufacturing of the supply side
was real string the people were saving and hence the consumer spending was at an all time low
which weakened the economy. The numbers improved in the next year but again fell in 2015 to the
lowest they had been in quite. Few years. This was mainly due to the collapse of the mining boom
which brought about much pains in the economy. The mining boom in Australia was a once in a
century kind of investment opportunity with investment flowing in from all parts of the world. With
that ending , it hit the Australian economy hard and there was much panic if the Australian
economy could be actually heading for a recession. (Farrer, 2016) Though in the next year the rate
of growth of GDO had risen but not by enough to completely mitigate the fears of the people.
Though it must be highlighted that even if the growth numbers were very bad this was better than
what the economists were expecting, mainly helped by the growth in the final consumption
expenditure. The economy again rose in 2016 and with the 2017 numbers just released it has again
decreased from what it was in 2016. With this there is again talks as to if the country could be
heading into recession again. But there is every reason to believe that this wont be happening. The
investment from mining had been one of the major things that was holding the economy back. The
pull back of investment from mining was negatively affecting the economy as that would be
contributing to the GDP. However that effect is almost over. The mining boom was a positive shock
to the economy and the economy is still even mildly rolling from the effects of that shocks being
over. What is a better news is that there has been a steady increase in the investment in the non
mining sectors and that could really help increase the rate of growth of the GDP in the coming
years. The final household consumption expenditure (per LCU) is also on the rise and could very
well be another major factor that could boost the GDP of the economy. Free trade that is practised
in Australia is another thing in the favour of the country that could be looking to and the net trade
balance would be positive for the country helping boost the economy (Scutt, 2016).
The main components of the Australian economy have already been highlighted below. Australia is
a service providing county at the core and the bulk of the economic weightage goes to that. There
are other industries like manufacturing and mining but their fate has fallen on some hard times in
recent times. Below we will focus on the services sector and the mining sector so as to show how
these two major sectors changed in the last 5 years.
Service sector
The service sector contributes to the majority of the GDP of Australia. It contributes around 70% of
the GDP and imply around 80% of the Australians. This industry also account for the trade with