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
The report critically evaluates projected slow economic growth less than 3 percent. Two crucial
factors discussed for slow economic growth of Australia are slow growth of housing market and
slow growth of China’s economy. The growth analysis of Australia has been done in a
systematic way. The report first discusses historical trend in economic growth of Australia.
There are several components of Australia’s GDP. The report finds share of each of the
components in GDP of Australia. Investment in housing market and associated growth of
housing play an important role in Australian economy. Below average growth rate of housing
leads to an overall decline in economic growth of Australia. The trade relation with Australia is a
significant contributor of Australia’s economic expansion. China accounts a considerably large
share in total Australia’s export. Slow growth in China means a relatively smaller demand for
Australia’s export resulting in a low growth of Australia. The finding suggest that slowdown of
domestic housing market and economic downturn in China leads to a below average projected
growth rate for Australia.

2ECONOMIC PRINCIPLES AND DECISION MAKING
Table of Contents
Introduction......................................................................................................................................3
Historical GDP growth....................................................................................................................4
Components of Australian GDP......................................................................................................5
Share of different components in GDP............................................................................................6
Consumption................................................................................................................................6
Investment....................................................................................................................................6
Government expenditure.............................................................................................................6
Net export....................................................................................................................................7
Housing market in Australia............................................................................................................7
Slowdown in China’s economy.......................................................................................................9
Australia’s export.........................................................................................................................9
Australia’s import......................................................................................................................10
China’s share in Australia’s export............................................................................................10
Conclusion.....................................................................................................................................13
References......................................................................................................................................15

3ECONOMIC PRINCIPLES AND DECISION MAKING
Introduction
Gross domestic product is a composite measure for evaluating overall economic
performance of a nation. The measure though is criticized for not incorporating many aspects of
social welfare, GDP is widely used for measuring or comparing economic performances of
different nation (Burda & Wyplosz, 2013) Australia is one of the developed nations known for
maintaining a steady growth rate for a considerably long period. The steady economic growth of
Australia is not only contributed from expansion of domestic economic activity but also is a
result of Australia’s connectedness with the global economy (Hartwell, 2017). The global
economic growth especially growth of its trading partners is important contributor of economic
growth. In recent year however economic growth of Australia is predicated to be below 3
percent. One of the main reasons that held responsible for slower economic growth of Australia
is slowdown in China’s economic growth (Nguyen & Wang, 2019). The report critically
evaluates validity of this argument in light of obtained evidences.
In order to evaluate whether China’s slowdown is the sole reason of sluggish economic
growth of Australia, the report first analyzes historical growth rate of Australia. The major
components of GDP are discussed along with the respective share of each component. Housing
is one important sector of Australia. Bursting bubble in housing market was previously
responsible for below average growth rate of Australia. The housing market and projected
growth rate of housing market are evaluated to estimate impact of housing market on GDP
growth of Australia. Finally, importance of China’s economy in economic growth of Australia
has been evaluated by analyzing export and import share of China. The adverse economic
condition of China in recent year has significantly lowered demand of Australia’s export. The