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Economic Growth in Australia

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Added on  2021-05-30

Economic Growth in Australia

   Added on 2021-05-30

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Running head: ECONOMICSGDP and Economic growth in Australia last 5 yearsName of the Student:Name of the University:Author note:
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1ECONOMICS Growth, contributors and challenges of Australian GDP and economic growth, 2012-2016 The Australian economy is one of the most highly developed economies and one of thebiggest mixed economies of the world. The nation has set a record of having 26 years of longestrunning economic growth (OECD, 2017). The major contributory sectors in economic growthare the financial services, construction, manufacturing, mining, healthcare and IT services.According to World Bank, in 2016, the GDP of Australia at current USD was $1204.62 billion.Australia was the only country that was not much affected during the global financial crisis of2008-09 and recorded a positive growth rate of 0.9% in 2009 (Battellino, 2010). Growth of the Chinese economy has contributed majorly in Australia’s economy. Chinais the biggest export market of Australia. During the period of 2005-2015, Australia receivedaround USD 84 billion of Chinese direct investment (Rahman, Shahbaz & Farooq, 2015). Thefloating exchange rate and low interest rate have helped in stabilizing the economy during theshock of 2008. Moreover, the government had deregulated the banks to operate freely as per themarket situations, and not implement direct controls. Mining boom was another contributor ofGDP and economic growth in Australia. By 2012, mining contributed almost half of theeconomic growth and GDP. This has increased the wage level attracting migrated workers(Downes, Hanslow & Tulip, 2014). Flexible labor market helped to reduce unemployment in thenation. The growth of tourism has also contributed significantly in the GDP and growth ofAustralia. Ongoing structural change in the economy is the biggest challenge for Australianeconomy. There is shift of focus from agriculture, mining and manufacturing to the servicesector, accompanied by change in demand pattern for resources. As the mining boom is almostover, mining investment has reduced and many mining companies had to reduce their work force
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2ECONOMICS that increased the unemployment in the economy (Rees, Smith & Hall, 2016). The inflation inthe country is 1.9%, that is, lower than the expected 2%, which keeps the rate of wage growthlow in Australia (Bishop & Cassidy, 2017). From 2012-2016, the GDP of Australia has declinedas shown in figure 1. Comparison between 1990 and last 5 years GDP of Australia1990201220132014201520160.00200.00400.00600.00800.001000.001200.001400.001600.001800.00311.431538.191567.181459.601345.381204.62Australia GDP (current US$, billion)Australia GDP (current US$, billion)Figure 1: GDP of Australia, 1990 and 2012-2016(Source: World Bank, 2018)In 1990, the GDP of Australia was only 311.43 billion USD, while in 2012, it reached to$1538.19 billion. The reason of this change is the structural change in the economy, fromagriculture and manufacturing to mining and service sector since the 2000s. With globalizationand trade liberalization, there is rise in FDI, demand as well as production, and internationaltrade, which contributed in the economic growth.
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