Economic Principles and Decision Making

Running head: ECONOMIC PRINCIPLES AND DECISION MAKING
Economic Principles and Decision Making
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1ECONOMIC PRINCIPLES AND DECISION MAKING
Executive Summary
This report pertains to discuss the prediction of fall in Australian GDP growth below 3
percent in 2019 is due to low growth of housing market in Australia and China’s economic
slowdown. To discuss the components of GDP have been considered and brief discussion on
them have been made to understand the role of the responsible factors and categorization of
them as the sub components. Before the discussion of components, the historical data of
Australia’s GDP have been discussed thoroughly along with fluctuations and trend to have
clear idea regarding the influence of the slowing down factors of GDP growth. The current
contributions of the components have been considered and the effects of the low growth of
housing market and change in export values due to China’s economic slowdown calculated
by considering current GDP value of Australia. The findings from the discussion led to the
conclusion that both the factors have influenced the GDP growth rate of Australia and as a
result, the prediction of fall in GDP growth below 3 percent is materialized.

2ECONOMIC PRINCIPLES AND DECISION MAKING
Table of Contents
Introduction................................................................................................................................3
Historical GDP Growth of Australia..........................................................................................3
Components of Australian GDP.................................................................................................5
Shares of different components in GDP.....................................................................................6
Housing market..........................................................................................................................7
Slowdown of China and impact on Australia............................................................................8
Exports of Australia...............................................................................................................8
Imports of Australia...............................................................................................................8
Conclusion................................................................................................................................11
References................................................................................................................................13

3ECONOMIC PRINCIPLES AND DECISION MAKING
Introduction
Gross Domestic Product is a widely used parameter to measure and understand a
country’s economic scenario. However, many have criticized it as a poor indicator of a
country’s true economic and social welfare. Yet it is used to measure the economic output of
a country because of its versatility in considering only economic factors that influences the
overall output of an economy (Goodwin et al., 2015). Thus, every country measures GDP and
represents it economic output in terms of GDP.
This report discusses the GDP of Australia along with its historical data on GDP to
understand the prediction of fall in its GDP below 3 percent in 2019. It is argued that the
reason behind the prediction of fall in GDP is the low growth of housing market in Australia
and decrease in Australia’s export to China due to present adverse economic condition in
China (Blagrave & Vesperoni, 2018). Therefore, in the report the analysis of the major GDP
components is done to identify the main factor that are influenced by the aforesaid factors
that are believed to be responsible for the prediction of reduced GDP growth. Furthermore, in
the report, the data on growth rate of housing market is considered and calculations are made
to find the effect of the housing market investment on the GDP growth. The effect of
slowdown of economy of China is also considered and analysed and the effect on GDP of
Australia is discussed. Thus, the report discusses the effect of both the housing market and
Chinese economic slowdown on Australian GDP in 2019 and argues that low growth of
housing market is not the only responsible factor behind decreased Australian GDP but slow
economic growth of China is also the major factor behind it (Paramati, et al., 2018).
Historical GDP Growth of Australia
Low economic growth is one of the characteristics of developed economies. Australia
as developed country experiences low economic growth for a long time now, but the growth