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HI5003 - Business Economics Assignment

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HI5003 Economics for Business (HI5003)

   

Added on  2019-10-31

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This essay will emphasise the global economy and the growth experienced by the Australian economy. This will try to describe the economic growth dynamics of the country in the last five years, looking over the performance of the country in the diverse economic sources of growth and trying to understand the outcomes with the help of economic concepts. The reason behind choosing the Australian economy is that the country is experiencing a slowdown in the economy for so long and this identification will help in gaining information about strategies being used in order to have a stable economy for the country.  All of these points will help in getting information effectively about the economy of the country so that theoretical and practical knowledge can be gained. 

HI5003 - Business Economics Assignment

   

HI5003 Economics for Business (HI5003)

   Added on 2019-10-31

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Running head: ECONOMIC GROWTH IN AUSTRALIA Economic Growth in AustraliaName of the StudentName of the UniversityAuthor Note
HI5003 - Business Economics Assignment_1
1ECONOMIC GROWTH IN AUSTRALIA Introduction The global economy over the years has undergone significant dynamics and turmoil (bothpositive as well as negative) contributing to the shape and health of the overall economy of theworld as well as the same of the players. The global economy, though has many participants, ismainly influenced by several big economies, which enjoys significant decisive and market powerand have huge implications of their policy frameworks and strategies on the internationaleconomy as a whole. One of these dominant economies is the economy of Australia. Thecountry, being one of the primary developed countries in the world, is one of the largesteconomies in the mixed market framework (Gopinath, Helpman and Rogoff 2014). With a totalwealth of 8.9 trillion AUD in 2016, the country is the fourteenth largest economy in terms ofnominal GDP and considered to be the second wealthiest country in the world in terms of peradult wealth, just after that of Switzerland. The economy of the country is also known for itsincredible stability, with no technical recession in the last 26 years and having the record of thelongest uninterrupted GDP run. The essay tries to portray the economic growth dynamics of thecountry in the last five years, taking into account the performance of the same in the differenteconomic indicators of growth and trying to interpret the results with the help of economicconcepts (Dyster and Meredith 2012). Economy of Australia With the first settlement of the Europeans in the country, taking place in 1788, thecountry has seen huge changes and dynamics over the years with transformations in populationgrowth, demography and change in the entire economy. The economy of Australia has moved
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2ECONOMIC GROWTH IN AUSTRALIA from being categorically agricultural to industrial and then to a prominent service sectoreconomy. Currently, the service sector dominates the economy of Australia, with a share ofaround 61% in the GDP of the country and creating employment for around 79.2% of the peoplein the labor force of the country (Ravenhill 2017). The country has emerged as a technologicaland mining giant, with a recent tremendous boom in the mining industry, which started in 2003.Australia also enjoys a significant and steady external sector, with long term and beneficial traderelations with almost all of the significant economies in the world, including the USA, Japan andChina, to name a few. The country specifically enjoys the benefit of Free Trade Agreement withthe economy of the USA, which along with China, contributes significantly to the Foreign DirectInvestment statistics of the economy of Australia over the last few decades (Downes, Hanslow,K and Tulip 2014). One of the primary factors contributing to the growth scenario of the countryover the years has been the economic, political and social stability which the country. Theoverall framework of the country is such that in spite of the short-term fluctuations anddownturns which the country experiences with time, it manages to bounce back to a steady statepath over the time. Australian Economy in the last five years The economy of the country has shown a more or less consistent upward trend over theyears, which can be seen with the help of the indicators of economic growth such as nominal andreal Gross Domestic Product, the growth and growth rates of the same and the GDP per capita.
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3ECONOMIC GROWTH IN AUSTRALIA Figure 1: Gross National Income of Australia (2012-2017) in AUD million (Source: Tradingeconomics.com, 2017)The above figure shows that the Gross National income of the country has increasedsteadily in the last five years, from around 385,000 million AUD in 2012 to a striking422113million AUD, in the first quarter of 2017, which however decreased to around 419432million AUD by the second quarter of 2017. As seen from the above figure, this increase hasbeen steadily occurring, with the growth getting impetus specifically in the middle of 2016(Plumb, Kent and Bishop 2013). However, the GDP and GDP growth rate statistics differ from the high positive patterns,which are shown in the Gross National Income estimate of the country.
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4ECONOMIC GROWTH IN AUSTRALIA Figure 2: GDP of Australia (2012-2017) in USD million(Source: Tradingeconomics.com, 2017)The GDP statistics of the country does not show that much a positive trend as is expectedfrom the country, given its consistent standard performance in all the economic indicators ofgrowth and well-being. The GDP of the country, which was 1538.19 billion USD in 2012,experienced an increase to 1567.18 billion USD in 2013. However, post 2013; the GDP kept ondecreasing strikingly, with the number being 1204.62 billion USD in 2016 (Kubiszewski et al.2013). This indicates towards a negative rate of growth of GDP, at least for a span of time in therecent period, for the country, which can be shown with the help of the following figure:
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5ECONOMIC GROWTH IN AUSTRALIA Figure 3: GDP Growth rate in Australia (2012-2017)(Source: Tradingeconomics.com, 2017)As is evident from the Figure 3, the growth rate of GDP of the country, which otherwiseshows a consistent trend, had experienced a massive low during the late 2016 and early 2017. Ascan be seen from the various data sources, the growth rate was merely 0.2% in June 2017, whichis below the speculated level of growth. The Nominal GDP also saw a weak growth of 1.8%,which was the lowest the country has seen after 1962 (McCombie and Thirlwall 2016). Reasons behind this slowdown: The main reasons, which are being speculated, by the economists of the country, for theslowdown in the growth rate were the huge slowdown in the mining activities of the country.Australia, which experienced a non-parallel boom in the mining sector, from 2003, gained muchfrom the expansion of this sector over time. However, with time, the effects of the boom in themining sector have started to wither out, as can be seen from the recent stagnancy in the miningsector (Eichengreen, Park and Shin 2013).
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