Economic Health of Australia Report
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Added on 2020-04-07
Economic Health of Australia Report
Added on 2020-04-07
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Executive SummaryAustralia, one of the most significant players in the global economic scenario, is ranked twelfth in the world in terms of Nominal GDP andnineteenth in terms of purchasing power parity, in the global economy. The economy of Australia has been a stable one in a general framework and has shown more or less consistent and upward rising economic growth trends barring the few short term and middle term fluctuations. This report highlights the economic health of Australia over the past year. The state of the economy canbe measured by theeconomic indicators and comparing them to their set targets, this will provide a vision whether they have been achieved or not. This reports compares the performances of the economy ofthe country from the second quarter of 2016 to the end of the first quarter of the current year.Those indictors to measure state of economy include:GDP (Gross Domestic Product): GDP growth in the last quarter of2016 in October was negative -0.8%. It grew in the first quarter of 2017 and in the end of the second quarter GDP growth was 0.8%( Tradingeconomics.com, 2017). It is expected that the real GDP will grow 3% by 2018(Budget 2017-2018). Unemployment: The unemployment rate increases from October 2016 to first quarter of 2017, from 5.6% to 5.9% respectively(Tradingeconomics.com 2017). The rate of Unemployment decline in June 2017 at 5.6%. The budgeted unemployment rate by 2018 is 5.1% (Budget 2017-2018).Inflation: In the end of July 2017, the inflation rate of Australia was 1.9% which is considerably high than the July 2016 at 1%. The target rate for Inflation is 2-3% (Inflation target,2017).Term of Trade: In July 2016 the term of trade was 90.2%, which has been increased in July 2017 at around 13.4%. It is because of high rate export and import.Three issues:This report also underpins the three economic issues including the new tax system, the wage rates of the country and the rise in the population pressure.
Introduction:The purpose of this report is to understand the economy of Australia in the macroeconomic environment. This report will compare state of the economy in 2016 with 2017.This will be done through examining the economic indicators; economic growth(GDP) of Australia, unemployment rate, inflation and trade. This report also highlights the three major issues that economy is facing including the new tax system,the wage rates of the country and the rise in the population pressure.GDP of Australia (2016-2017):The GDP of a country is the sum of the values of all the final goods and services that are produced within the geographical boundaries of the same country, within a specified period of time, usually one economic year. The GDP can be measured in terms of current price levels (Nominal GDP) as well as in real terms (Real GDP). Australia enjoys a robust GDP of an average of 1343.6 billion USD, much of which is contributed to the consistently increasing consumer expenditures in the country (Boons et al. 2013). Figure 1: GDP Growth Rate of Australia (2016-2017)(Tradingeconomics.com, 2017)As can be seen from the above graph, the economy of Australia, which showed a negative growth trend in October 2016, bounced back considerably in the first quarter of the current year, with a GDP growth rate of 1.1%. The growth again, slowed down to a striking 0.3% and then rose to a 0.8% in quarter 2 June 2017(Tradingeconomics.com, 2017). Much of the increase in the GDP statistics in theAustralian economy can be contributed to the mining industry of the country, which specifically amounts to AUD$ 29393 million of the GDP in the first quarter of 1
2017(McCombieand Thirlwall2016). One of the other significant factor, which contributes robustly to this GDP statistics, is the consumption expenditures of the households, which in turn is a result of the increase in the spending in the non-discretionary sectors, primarily including electricity and gas. The overall increase in the expenditures of the household sectors in this period has been of the rate of 0.5%, which is an immediate indicator of a fall in the rate of savings in the country as a whole, which fell by 4.7%. The investment, however, contributes only 0.4% to the growth of the nation in the current period. Apart from these factors, the increase in themedical and social services and changes in the inventories also played their parts in increasing the GDP of the country, with the latter increasing to AUD$ 2069 million by the end of the first quarter of 2017(Gregory and Smith 2016). According to the forecasts of the Reserve Bank of the country (RBA), the economy is expected to see a growth of around 3% by the end of the current year (McLean2012). Much of the turmoil in the growth dynamics of the economy is expected to be coming from the post-mining boom conditions, which the economy is experiencing now (Kubiszewski et al. 2013). Changes in Unemployment rate between 2016 and 2017:The rate of unemployment of Australia is taken to be the number of people who are eligible to work but are unemployed, with respect to the population of the country. The dynamics with respect to this indicator can be shown with the help of thefollowing diagram: Figure 3: Rate of Unemployment: Australia (2016-2017) (Tradingeconomics.com, 2017)The economy is seen to have performed quite impressively in this field, as can be gauged from the above figure. The rate of unemployment in the country has massively decreased from 5.9% in June 2016 to the 5.6% by the end July 2017. The changes in the labour market and the types of jobs have major contribution in this impressive decline in the rate of unemployment. In the recent times, there has been a huge inflow of part-time jobs in the Australian economy, which increased the scope offlexible and mobile job searching and finding in the economy (Tonts, Plummerand Lawrie2012). Though there has been a considerable decrease in the full-time jobs in the economy, the effect is offset by the increase in the part-time jobs by the end of the first quarter of the current year. In the recent year, as is suggested by different data sources, 239,373 new jobs have been created, most of which are of part-time types, 2
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