Australian Economic Growth Rate and Challenges

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Economics Assignment
Students Name
Institution

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AUSTRALIAN ECONOMIC GROWTH RATE
Noteworthy, the Australian economy steadily grew between the year 2005 and the year 2008
from $693.764 billion to 1.55 trillion respectively. However, the Australian economic growth decreased
in the year 2009 recording a GDP of $927.168billion.Luckily, the economic activity picked up in the year
2010 at $1.143 trillion and later declined to $1.391trillion in the year 2011 before picking up again in the
year 2012 at $1.583trillion and 1.567trillion in the year 2013, which was a small reduction from the
previous year’s gross domestic product. Predominantly, the Australian economic performances has been
steadily declining since the year 2013 to the year 2016.Specifically, the economic performance of the
Australian economy stood at $1.46 trillion in the year 2014 and $1.345trillion in the year 2015 .Further,
the Australian economic performance stood at $1.205 trillion in the year 2016.There are various factors
responsible for the fluctuating performance. Prior to the global financial crisis(2005),the Australian
economy was booming due to the strong financial framework, high commodity prices, high levels of
foreign investment and high employment opportunities which boosting the Australian economic growth.
Particularly, between the years 2008 and 2014, the Australian economy was recovering from the
global financial crisis and low global commodity prices. The rise of the Australian economy is due to the
mining industry fortunes and the dollar appreciation during the period. However, the post mining boom
period has left employment, low investment rates among other economic challenges. Following the end of
the boom, there has been increased rate in unemployment which has led to high welfare costs and
underutilization of Australia’s natural resources which has slowed down the economic growth pace of the
Australian economy .Also, the reduced pricing of commodities has not helped matters economically. It is
imperative that the Australian government employ respective fiscal and monetary policies to boost the
macroeconomic environment for economic growth and activity.

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FACTORS FOR THE GROWTH VARIANCE
Notably, the Australian economy performance has been affected by both global and internal
events. Among the notable global events is the global financial crisis which took part between 2007 and
2010.Despite the adverse effects of the financial crisis on most international financial systems, the
Australian economy was slightly affected(ABS 2010).Unlike other financial systems in Europe that
required financial bailouts from their governments, the Australian financial framework did not require
such assistance from its government thus explaining the current economic activity recovery in Australia
as being higher than the rest of European countries. Remarkably, the Australian economy has enjoyed
fixed interest rates on its financial facilities since the financial crisis which has contributes to the
continuous and steady economic growth levels. However, the Australian equity shareholdings and the
Australian dollar performance has depreciated following the crisis. The devaluation of the dollar slowed
down the economic potential and performance of the economy as illustrated in figure 1 below. Notably,
between the year 2013 and 2015, the Australian dollar has been depreciating thus contributing to low
economic growth.
(Austrade 2015)

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Further, the mining boom positively boosted the economic growth rate of the Australian economy
(Downes, Hanslow and Tulip 2014).Through increased mining activity and investment ,the value of the
Australian dollar went up thus contributing to the economic growth of the Australian economy. With
higher foreign exchange values due to the dollar appreciation, the value of goods and services went up
which greatly benefitted the Australian gross domestic product.Alsongside increased revenue contribution
of the mining sector towards the Australian overall economic value, the boom created more employment
opportunities in the industry and other supportive industries leading to increased internal and external
revenue for the Australian households and government(Figure 1).The boom attracted foreign investment
into the sector of mining thereby creating more work and revenue for the economy. The high value of the
Australian dollar during the boom also uplifted the housing and construction industries values whose
contribution has increased the economic performance of the Australian economy. The mining industry
was the largest economic revenue contributor between the year 2013 and 2016.
(Phillips 2016)
After the end of the mining boom, the level of economic activity in the mining sector slowed
down. Not only the mining activity slow down but the sector contribution to the gross domestic product
slowed down too. Following the boom, there was massive investment opportunities by locals and
foreigners .However, towards the end of the boom, there was reduced investment in the mining