Economic Growth of Australia: Factors, Challenges and Policy Responses

Running Head: ECONOMICS ASSIGNMENT
Economics Assignment
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1ECONOMICS ASSIGNMENT
Table of Contents
Economic growth of Australia.........................................................................................................2
Factors responsible for growth performance of Australia...............................................................3
The rise of China and the mining boom......................................................................................3
The global financial crisis (GFC) and its impact on the Australian economy.............................4
The Australian policy response to the global financial crisis......................................................6
The end of the mining boom and the transition to the post mining economy.............................6
The challenges ahead and the policy responses needed to generate higher growth rates................7
References list................................................................................................................................10

2ECONOMICS ASSIGNMENT
Economic growth of Australia
Economic growth rate is computed as a percentage change in Gross Domestic Product
from one year to the next. The economic growth thus measures output growth of a nation
overtime (Goodwin et al., 2015). The figure below shows the trend growth of Australian
economy for the period from 2005 to 2017.
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Economic growth
Year
Growth rate
Figure 1: Trend in economic growth of Australia
(Source: abs.gov.au, 208)
The economic growth in Australia in the year 2005 was 3.2 percent. Economic growth
declined by 0.4 percentage point in the year 2006 with accounted economic growth being 2.8
percent. GDP growth increased by 1 percentage point in 2007. The economy during this period
grew at a rate of 3.8 percent. In the next year, economic growth declined by 0.1 percentage point.
The recorded economic growth in the year 2008 was 3.7 percent. The trend growth path of
Australia marked a sudden break after the hit of global financial crisis in the year 2008.

3ECONOMICS ASSIGNMENT
Economic growth suddenly fell to 1.9 percent in the year 2009. The resilient nature and policy
support of Australian government helped the economy to overcome economic shock. Growth
recovered to 2.1 percent in 2009. The Australian economy continued to grow at an increasing
rate till 2012. In 2012, economic growth reached to the highest level of 3.9 percent. Mining
sector contributed to a significant portion of economic growth. China’s economic growth and
resulted mining boom helped the economy to achieve the rapid economic growth during this
phase (Allen & Day, 2014). The economic growth again started to slow down from 2013
onwards. GDP growth dropped to 2.6 percent in 2013 and remained at the same level in 2014.
Economic growth slightly improved in the year 2016. The record economic growth was 2.8
percent in the year 2016. GDP growth of Australia slipped to 2.0 percent in 2017 (Letts, 2018).
Factors responsible for growth performance of Australia
As indicated by the growth trend, the economy of Australia experienced some upturn and
downturn in the trend growth path. Fluctuation in the economic growth resulted from economic
incidence in the domestic and global economy. Some of the economic events significantly
influencing economic growth of Australia include economic growth of China and mining boom
in Australia, global financial crisis, end of mining boom and the like. The economic events and
their influence on Australian economy is discussed below.
The rise of China and the mining boom
A major portion of economic growth trend in Australia in the last decade was explained
by the growth of China and derived demand for Australian minerals. Economic growth in
developing nation such as China helped Australia to explore its mineral resource to meet demand
in these nations. Australia also export high ended goods and services (Syed et al., 2015). There