Performance of Australia’s Construction Industry: Analysis of Real GDP, Inflation, Fiscal and Monetary Policies, and Industry Sectors

Running head: PERFORMANCE OF AUSTRALIA’S CONSTRUCTION INDUSTRY
Performance of Australia’s Construction Industry
Name of the Student
Name of the University
Author Note

1PERFORMANCE OF AUSTRALIA’S CONSTRUCTION INDUSTRY
Table of Contents
Table of Contents.............................................................................................................................1
Introduction..................................................................................................................................2
Discussion....................................................................................................................................2
Production Analysis.................................................................................................................2
Price Level Analysis................................................................................................................4
Fiscal Policy.............................................................................................................................6
Monetary Policy.......................................................................................................................6
Construction Industry Analysis...............................................................................................6
Conclusion.................................................................................................................................11
Part 2..............................................................................................................................................12
Introduction................................................................................................................................12
Analysis of the Engineering Construction Sector......................................................................12
Government Measures...............................................................................................................14
Conclusion.................................................................................................................................14

2PERFORMANCE OF AUSTRALIA’S CONSTRUCTION INDUSTRY
Part 1
Introduction
The economy of Australia has been growing over the years and has been performing well
consistently in comparison to the other OECD countries. In 2017, as per the IMF (International
Monetary Fund) data, the rate of inflation in Australia had been around 1.9% in 2017. The
unemployment rate as on 2017 was low at 5.6% and is expected to further fall as predicted by the
ABS or Australian Bureau of Statistics. This part of the report analyses a few of the economic
indicators of Australia and checks its economic performance for the last five years and the
performance of the different sectors of the construction industry. The indicators selected are the
real GDP, the growth rate of real GDP and the inflation rate. Further analysis of the construction
industry and its different sectors is carried out in details. The monetary and fiscal policies
undertaken over the past five years have also been studied in the following sections of this
report.
Discussion
Production Analysis
Real GDP
Real GDP or real gross domestic product takes into account the final value of goods and
services that is produced by a given country, in a given year, within its geographical territory of
that country. Real GDP is an inflation-adjusted measure, which is expressed with respect to a
given year which is kept constant and is called a base year. By keeping the base year constant,
the changes that take place in the price level of the economy can be traced and this will help in
providing a more accurate reflection of a country’s economic growth. To analyze the purchasing
power and level of growth of an economy governments often use this measure. The graph shows

3PERFORMANCE OF AUSTRALIA’S CONSTRUCTION INDUSTRY
that the real GDP has been increasing consistently over the last five years in Australia. The terms
of trade facing Australia had seen improvement since the late 2000s. This resulted in a constant
rise in the real GDP above the level that had been forecasted. In 2012, there was a decline mining
investments in response to low commodity prices. This resulted in a low level of real GDP.
However, non-mining investment caught up which brought up the real GDP and it showed a
constant rise. (Steven, 2016). The government lowered the prevailing rate of interest along with a
depreciation of exchange rates to maintain the level.
FIGURE 1: Real GDP (2013-2017)
Data source: World Bank Data Bank, Source: Created by the author
Real GDP Growth
Growth rate of real GDP is the rate of growth of or change in the market value of goods
and services that are produced within the geographical borders of a country in a given period of
time while being adjusted to inflation. The growth rate of real GDP is adjusted for inflation and
therefore it takes into consideration the purchasing power. It is broadly used as a measure of a
country’s economic growth. The economy of Australia has portrayed a very consistent growth