Australian Economic Outlook
Added on 2020-02-19
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Running head: CURRENT ECONOMIC PERFORMANCE OF AUSTRALIACURRENT ECONOMIC PERFORMANCE OF AUSTRALIAName of the StudentName of the UniversityAuthors Note
1CURRENT ECONOMIC PERFORMANCE OF AUSTRALIAExecutive SummaryThe aim of the report is to elucidate on the current performance of Australian economy. Thenation economic health is analyzed with the help of macroeconomic indicators including GDP,rate of inflation, unemployment rate and terms of trade. The Reserve of Australia (RBA) plays acrucial role in order to stabilize the country’s output and enhance economic growth. However,RBA adopts expansionary monetary and fiscal policy instrument for smoothening cyclicalfluctuations. The central bank sets rate of interest on loans in money market. In addition, fiscalpolicy adopted by RBA facilitates in managing overall demand in the nation. These policiesimplemented by the central bank influences the credit availability. However, if the economyexpands in faster way, then RBA focuses to increase cash rate for reducing aggregateexpenditure in the country. On the other hand, if the situations in the economy worsen then thecentral government of this nation cuts the rates. The RBA targets on maintaining stability inprice and full employment for determining monetary policy. In addition, the government ofAustralia sets an inflation target and seeks in keeping consumer price index below 2% on anaverage within the economy. The central bank controls inflation rate in order to preserve themoney value and encourage sustainable growth within the nation for longer term. The nationalways runs in deficit of current account because enough savings are not generated in thiscountry for financing its investment needs. The government also focuses on foreign investmentin order to stimulate economic development and living standard of the people. Therefore, theAustralia government introduces reforms in various sectors in order to increase domesticproductivity and enhance competitiveness within the economy. Besides these policies, the centralgovernment adopts microeconomic reform strategy such as labor market agenda for curbingincreasing unemployment issues. This report also reflects on the comparison of Australia’seconomic strength between Q1 of 2016 and Q2 of 2017. All these economic indicators signifythat the present economic conditions improved in Q1 of 2017 in comparison with Q2 of 2016.The paper also discuses about the three major issue that Australian economy face over the next12 months. Ageing population, prevailing tax system, infrastructure and capital investment arethe main issues that influences the economic health of this country. Growing health cost thatassociates with enhancement of technologies such as medicines and good quality servicerequired by the customers increases fiscal pressures. Improper tax settings might decreaseworkforce participation rate. Australian economy also faces huge competition from the other
2CURRENT ECONOMIC PERFORMANCE OF AUSTRALIAcountries in terms of limited capital availability for big projects. However, less capitalinvestment on infrastructure will adversely influence the Australian economy.
3CURRENT ECONOMIC PERFORMANCE OF AUSTRALIATable of ContentsIntroduction......................................................................................................................................4Discussion........................................................................................................................................4Current economic performance of Australia...............................................................................4Comparison of Australia’s economic performance between Q2 of 2016 and Q1of 2017...........5Three major issues that Australian economy faces over the next 12 months..............................8Conclusion.......................................................................................................................................9References......................................................................................................................................10
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