Evaluation of Macroeconomic Performance of Australia and New Zealand

EVALUATION OF MACROECONOMIC PERFORMANCE OF AUSTRALIA AND NEW ZEALAND i
EVALUATION OF MACROECONOMIC PERFORMANCE OF AUSTRALIA AND NEW ZEALAND
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EVALUATION OF MACROECONOMIC PERFORMANCE OF AUSTRALIA AND NEW ZEALAND ii
Executive summary
The major economic goal of any nation is to improve its economic performance. A country’s
economic performance is reflected by its macroeconomic performance. Macroeconomic
performance indicates the performance of the economy as a whole. A country’s macro-economy
is measured by evaluating four major pillars which include the level of unemployment, the rates
of inflation, the balance of payments and the real gross domestic product (Halligan, 2013, p.17).
Interest rates may also be considered. A country is said to be undergoing economic growth if its
real gross domestic product improves with time, the level of employment is low, the balance of
payments is favorable (exports exceed the imports) and the rates of inflation are low (actually
less than two percent). Australia and New Zealand are both countries in the Asia Pacific region
and have been doing well in terms of economic performance. Considering the real gross
domestic product, Australia has been doing better than New Zealand. New Zealand has a lower
level of unemployment than Australia. New Zealand has higher interest rates compared to
Australia for the period 1995-2015. Comparing the inflation rates, Australia has a lower inflation
rates than New Zealand for the period 1995 to 2015. In a nutshell, Australia and New Zealand
have doing well in terms of economic performance with Australia doing much better and the two
countries are anticipated to do much better in future.

EVALUATION OF MACROECONOMIC PERFORMANCE OF AUSTRALIA AND NEW ZEALAND
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Contents
Executive summary......................................................................................................................................ii
Introduction....................................................................................................................................................1
Data Collection..............................................................................................................................................2
Relation between both countries’ real GDP growth rates and Inflation Rates..............................................3
Relation between real GDP growth rates and Inflation Rates in Australia................................................3
Relation between real GDP growth rates and Inflation Rates in New Zealand.........................................5
Relationship between the unemployment rates in Australia and New Zealand.............................................6
Relationship between the cash rate and the official cash rate........................................................................8
The macroeconomic outlook prediction of Australia and New Zealand.....................................................10
Conclusion...................................................................................................................................................11
References....................................................................................................................................................11

EVALUATION OF MACROECONOMIC PERFORMANCE OF AUSTRALIA AND NEW ZEALAND 1
Introduction
The major goal of every country is to improve its economic performance and hence raise the
standards of living of its citizens. Economic growth of a country is measured mainly by its
macroeconomic indicators (Lovell, Pastor & Turner, 2015, p.507). Economic growth is the most
crucial statistic in any country as it indicates a country’s economic activity and can be used in
comparing a country’s economic performance internationally against other countries. A
country’s macro-economy measures the extent to which a country complies with the set
government economic goals, objectives and policies. Every country’s government sets economic
goals, objectives and policies which govern the economic activities within the country with the
aim of improving its economic performance. The macroeconomic performance of a country is
measured by four major indicators which include the real gross domestic product, inflation rates,
unemployment rates and the balance of payments account (Harris & Silverstone, 2011, p.11).
The level of the prevailing interest rates in an economy may also be considered. Generally, a
country with a positive economic growth has its real gross domestic product improving with time
(mostly on annual basis), the inflation rates should be two percent or less, the level of
unemployment should be as low as possible (the country should actually target an unemployment
rate of zero percent) and the balance of payments should be favorable (a favorable balance of
payments means that a country undertakes more export business than the imports).
Australia and New Zealand have been doing well in terms of economic performance and are
even anticipated to do much better in future. Both the countries’ economies are comprised
majorly of the service sector which accounts for more than 60 percent of both the countries real
gross domestic product (Castles, 2012, p.88). Both the countries compete favorably worldwide