Analysis of Economic Indicators and Issues in Australia

This report analyzes the key economic indicators of Australia, including GDP, trade, inflation, and unemployment, and predicts three major economic issues the country will face in the next year. The report concludes that Australia will experience an economic slowdown or recession, increased unemployment rate, and domestic currency depreciation.

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1Economic Indicators and Australia
Abstract
The report pertains to the analysis of the key indicators of economic health of Australia.
Economic indicators that have been considered are Gross Domestic Product (GDP),
unemployment, inflation and trade. The analysis of the economic indicators are done on based on
the data of last five years that is 2015-2019. The findings from the analysis of the economic
indicators suggested differently. In case of GDP and inflation it was found that these two
movements of the indicators suggested that the Australian economy has not been performing
well whereas the other two economic indicators suggested that the condition of economy has
been improving. However, the latter two economic indicators that is trade and unemployment are
less reflective in comparison to GDP and inflation and thus it has been concluded in the report
that Australia will face three major economic problems in coming twelve months and those are
increase in rate of unemployment, domestic currency depreciation and economic recession.

2Economic Indicators and Australia
Table of Contents
Introduction......................................................................................................................................3
Analysis of economic indicators of Australia..................................................................................3
Gross Domestic Product..............................................................................................................3
Trade in Australia........................................................................................................................4
Analysis of inflation in Australia.................................................................................................6
Unemployment in Australia.........................................................................................................6
Economic issues in Australia...........................................................................................................8
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

3Economic Indicators and Australia
Introduction
The report analyses the key economic indicators and study economic condition of
Australia. For analysis of the economic indicators data on the concerned indicators for last 5
years that from 2015 to 2019 has been considered. The key economic indicators chosen for the
study are gross domestic product (GDP), trade, inflation and unemployment. The report makes
trend analysis of the concerned indicators and indicate the possible three major issues that the
country might face in the next 1 year period of time.
Analysis of economic indicators of Australia
It is important to study the economic indicators of a country to understand its economic
conditions and also to the estimate the future economic changes that could possibly occur in the
economy of the country (Frumkin 2015). The economic indicators that are being analysed in the
below paragraphs are GDP, trade, inflation and unemployment. Emphasis is given on the
movement of these indicators because they reflect every almost every aspect of an economy such
as income, output, future trends and other important economic aspects.
Gross Domestic Product
Figure 1: Gross Domestic Product of Australia
Source: (Fred.stlouisfed.org 2019)

4Economic Indicators and Australia
Analysis of GDP is important since it reflects the total economic output a country
generates in a period of 12 months. It is known that more a country produces more will be its
income. Thus, more amount of GDP is beneficial for a country (Carducci and Jeggannagari
2019). The case is similar for Australia. An effective measure of GDP is its growth rate. From
figure 2 it is evident that the growth rate of GDP of Australia is declining since many years. In
2015, the growth rate was 0.9% whereas in 2019 the growth rate is 05%. During these five years
the highest
value of
growth rate was achieve d in 2017 and 2018 and the rate was 1%. The lowest growth rate was in
2016 at 0%. The trend line in the figure also suggests that the growth rate of GDP has downward
trend and is growing at a decreasing rate. IN 2018, the GDP of Australia was $1432 billion and
in 2016 the value was $1210 billion. It is thus tally with the GDP growth rate of the
corresponding years.
Figure 2: Growth in GDP
Source: (Tradingeconomies.com 2019)
Trade in Australia
A country opens up and make trade when it realises that by exporting and importing it
can make considerably significant amount of wealth and earn welfare for its economy. Australia
has many products that it can export and it requires many that it need to import and thus it has
participated in trade. The last 5 years data on terms of trade in Australia indicates that the trade
conditions of the country has been improving over the years (Dhingra et al. 2017). The terms of
trade index in 2015 was at 80 and with gradual increase it increased to 100 in 2019 as shown in

5Economic Indicators and Australia
figure 3. The growth of terms of trade depicts a skewed pattern. The major exporters of Australia
goods are China, India, Japan, the United States, Indonesia, South Korea and India, The major
export products of Australia are agricultural products and mining products. On the other hand,
major portion of Australia’s imports comes from China and the United States. It has been seen
that the current account of the country is increasing over the years. It is evident from figure 4 that
the current account was below zero for 4 years that is from 2015 to 2018. However, with
increasing growth rate, in 2019 the current account value for Australia went over zero marks and
reached 5000. Thus, positive values of trade factors indicates that the economy of Australia is
performing well in the area of trade.
Figure 3: Terms of
Trade in Australia
Source: (Tradingeconomics.com 2019)

6Economic Indicators and Australia
Figure 4: Current account in Australia
Source: (Tradingeconomics.com 2019)
Analysis of inflation in Australia
Australia is known for its inflation targeting policies and is successful enough to control
its inflation rate using this policy. Persistent low inflation rate in the country indicates the
successfulness of the inflation targeting policy. The analysis of inflation rate for the last five
years show that the rate of inflation in the concerned country has increased slowly (Moore 2016).
In figure 5 it is observed that the rate of inflation in 2015 was at 1.5% and was significantly low.
During this 5 years phase the lowermost inflation rate recorded was 1% in 2016 and the highest
was recorded at 2.1% in 2017. In 2019, the inflation rate in Australia is 1.6%. Thus, the average
inflation rate for the last five years in Australia is below 2% and is not a rate of inflation that can
support a good rate of growth of the economy. Thus, the country needs a better rate of inflation
for future growth. The rate of inflation as per figure 4 has an upward trend as suggested by the
trend line given in the figure. It can be thus predicted that the country will have more inflation
rate in coming years.
Figure 5: Inflation rate in Australia
Source: (Tradingeconomics.com 2019)

7Economic Indicators and Australia
Unemployment in Australia
Australia has been a tactful country in dealing with unemployment rate. The
unemployment rate has never been that high in Australia. However, it does not mean that it
would not suffer from undesirable rate of unemployment. Figure 6, show national unemployment
rate for the last five years. The unemployment rate in Australia in 2015 was recorded at 6.3%
and it gradually decreased with passage of time. In 5 years the unemployment rate in the country
reduced by 1% and in 2019 it is measured at 5.2%. The trend indicates that the unemployment
rate will further decline in the coming years in Australia. However, it is difficult to understand
the regional employment condition of the country and understanding such aspects are important
to assess the economic condition in Australia (Gregory and Smith 2016). Therefore, from table 1
it can be observed that there is significant disparity in unemployment rate among the states in
Australia. There are states where unemployment rate is between 4-5% and in some the rate is 5-
6%. In 2018, the least unemployment rate was at 3.5% in Australian Capital Territory whereas
the highest rate of unemployment was at 6.9% in Australia. Thus, lowering unemployment will
increase number of employment in the country in future.
Figure 6: Rate of
unemployment in Australia
Source: (Tradingeconomics.com 2019)

8Economic Indicators and Australia
Table 1: State-wise unemployment rate in Australia in 2018
Source: (Lmip.gov.au 2019)
Economic issues in Australia
The key economic indicators have been analysed above and it gave direction to
understand the economic scenario of Australia more appropriately. There are a four economic
indicators that have been discussed above and among those two indicates that the country is
performing well and the other two reflects the country is not. The rate of GDP growth and the
rate of inflation indicates that the economy of Australia is suffering from economic issues and
struggling to recover from its adverse condition. Conversely, analysis of data on trade and
unemployment rate suggest that the economy of the country is performing well as both the
indicators have improved since 2015. Thus, the trend in GDP growth clearly indicates that the
country is going to face economic slowdown in the coming days. With low inflation rate though
it is increasing but it seems insufficient to exert some fruitful impact on economy of the country.
Thus, due to low inflation rate there will be less increase in wage and that would lead to low
expectation for increment in wage. Therefore, the aggregate demand in the economy will be low
and as a result the industries will suffer and their business will shrink (Henry 2016). To avoid
loss companies will thus reduce number of employees and thereby the rate of unemployment will
rise in future. Therefore, the economy of Australia will experience an economic slowdown and
due to this it trade sector of country will also get affected and the currency will depreciate (Wu
2018). Thus, the three major issues the economy of Australia will face in next one year are
economic slowdown or recession, increased unemployment rate and domestic currency
depreciation.
Conclusion
In the discussions made above put emphasis on the analysis of the key economic
indicators. The discussion leads to the findings that the economic indicators are useful to
understand the economic condition of a country. The indicators in the case of Australia leads to

9Economic Indicators and Australia
the inference that that the country will face three major issues in the next one year due to poor
performance of the inflation rate and GDP growth rate. There are three majors issues in total and
they are economic recession, increase in rate of unemployment and domestic currency
depreciation. Thus, Australia is going to experience a dwindling economic condition in future.

10Economic Indicators and Australia
References
CarducciAC, D.N. and Jeggannagari, A., 2019. Key Takeaways from Australian Gambling
Statistics. Gaming Law Review, 23(5), pp.319-337.
Dhingra, S., Huang, H., Ottaviano, G., Paulo Pessoa, J., Sampson, T. and Van Reenen, J., 2017.
The costs and benefits of leaving the EU: trade effects. Economic Policy, 32(92), pp.651-705.
Fred.stlouisfed.org (2019). Gross Domestic Product for Australia. [online] Fred.stlouisfed.org.
Available at: https://fred.stlouisfed.org/series/MKTGDPAUA646NWDB#0.
Frumkin, N., 2015. Guide to economic indicators. Routledge.
Gregory, R.G. and Smith, R.E., 2016. 15 Unemployment, Inflation and Job Creation Policies in
Australia. Inflation and Unemployment: Theory, Experience and Policy Making, p.325.
Henry, K., 2016. Australia in the Asian century. Asia & the Pacific Policy Studies, 3(2), pp.132-
139.
Lmip.gov.au (2019). Welcome to the Labour Market Information Portal.. [online] Lmip.gov.au.
Available at: http://lmip.gov.au/default.aspx?LMIP/LFR_SAFOUR/LFR_UnemploymentRate.
Moore, A., 2016. Measures of Inflation Expectations in Australia. RBA Bulletin, December,
pp.23-31.
Tradingeconomics.com (2019). Australia Current Account | 2019 | Data | Chart | Calendar |
Forecast | News. [online] Tradingeconomics.com. Available at:
https://tradingeconomics.com/australia/current-account.
Tradingeconomics.com (2019). Australia GDP Growth Rate | 2019 | Data | Chart | Calendar |
Forecast | News. [online] Tradingeconomics.com. Available at:
https://tradingeconomics.com/australia/gdp-growth.
Tradingeconomics.com (2019). Australia Inflation Rate | 2019 | Data | Chart | Calendar |
Forecast | News. [online] Tradingeconomics.com. Available at:
https://tradingeconomics.com/australia/inflation-cpi.

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Tradingeconomics.com (2019). Australia Terms of Trade | 2019 | Data | Chart | Calendar |
Forecast | News. [online] Tradingeconomics.com. Available at:
https://tradingeconomics.com/australia/terms-of-trade.
Tradingeconomics.com (2019). Australia Unemployment Rate | 2019 | Data | Chart | Calendar |
Forecast. [online] Tradingeconomics.com. Available at:
https://tradingeconomics.com/australia/unemployment-rate
Wu, S., 2018. Exchange rate fluctuations and the trade balance between China and Australia.