Comparative Analysis of Australia and Canada's Economies

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Economics
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Abstract
This report involves the current economic condition of Australia by understanding economic
situation in Australia at the present time. There is comparison made between the economic
conditions of Australia and the economic condition of Canada between the period of 2015 to
2019. There were several findings during that period which have been explained in this report.
There is an explanation regarding the figures of the trend analysis related to the different period.
There is an explanation regarding the Australian economic growth which shows an increase in
the rate of the GDP but as compared to the GDP growth rate of Canada there is not much
success. So, in order to achieve the greater GDP, the government can aim to introduce the newly
designed tax cuts and rebates, can use the method of deregulation, can make efficient utilization
of the infrastructure, etc. Inflation rate of Australia is almost similar to Canada so, there is not
much problem related to the inflation but the government can aim to reduce this inflation by
introducing the contractionary monetary policy, they can aim at reducing the supply of the
money, they can make a reserved requirements on the money that banks legally requires to keep
it in hand. The unemployment situation in the Australian is becoming worst day by day but as
compared to the unemployment situation of Canada it is better but still there should much more
progress to be done in the field of the unemployment, For the purpose of reducing the
unemployment the government can increase the aggregate demand by reducing the interest rates,
they can introduce the new fiscal policy, government can aim to provide the education and
training development, they can reduce the minimum wage system in order to reduce the real
wage unemployment, government can introduce more flexible labor markets which can make it
easier to hire and fire the workers. In case of the trade, the Australian trade balance is far better
than the trade balance of Canada, few years before Australia to have got the negative trade
balance s but it has improved tremendously by keeping the positive balance of the trade balances.
The government can make furthermore objectives to gain more success in the trade balance by
managing the demands of the consumer-related to imports, by making the strategies for lowering
the exchange rates and also by boosting the exports of the country. The report has involved the
prediction of the normal issues which the Australian economy is going to face in the coming next
12 months and explanation regarding the concerns of these issues such as fall in the income, rise
in the unemployment and the investment in the infrastructure due to the population problem.
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These are the three major issues which are identified according to the current economic situation
of Australia as well as the trends have also helped in identifying these issues.
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Table of Contents
Introduction......................................................................................................................................4
The economic growth of Australia...............................................................................................5
Unemployment rate......................................................................................................................5
Inflation rate.................................................................................................................................5
Trade............................................................................................................................................6
The major issues which can occur in the coming 12 months are as follows:..............................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
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Introduction
The aim of this report is to understand the economic condition of Australia by making the
comparison with the economic condition of Australia, this also further helps in identifying the
ways through which the situation of Australia can be improved. This report demonstrates the
understanding of the Australian economic conditions by explaining the several economic factors
of Australia such as Unemployment, trade, economic growth, inflation, and several other factors.
The comparison has been made between the Australian economy and the other economy as well.
The report reflects the major three issues which are faced by the Australian economy in coming
12 months of time.
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The economic growth of Australia
The economic growth of Australia can be measured in terms of the GDP and the structure and
performance of the economy can be explained in terms of the GVA. GDP is one of the most
important measures which actually evaluates the Australian economy’s performance. The
Australian bureau has published the GDP figures of Australia on the annual and the quarterly
basis (Focus economics, 2018).
GDP growth rate of the last 5 years:
Years 2015 2016 2017 2018
GDP growth rate 2.5 2.8 2.4 2.8
After the ten years of the great recession from the year 1999 to 2008, Australia’s GDP grew by
3.4 % on an average per year. The Australian economic growth started to improve after the year
2013 then it started to witness the continued growth in the economy which has helped the
country in making achieving the several growths (Shahiduzzaman and Alam, 2014).
In the case of Canada, there has been good growth rate in the GDP as from 2015-2019 there was
only growth between 0.3 to the 3.0.
Unemployment rate
Australia
Years 2015 2016 2017 2018
Unemployment rate 6.1 5.7 5.6 5.8
There is an expectation of unemployment at an average rate of 5.2 % in the year 2019.
The unemployment rate of Australia has been decreased by 0.4% over the past recent year to
5.7% in June 2016. The number of people of Australia who are unemployed is fell by 40,000 to
the 726,000 (Bishop, 2017).
The unemployment rate of Canada is more than Australia as compared to Australia as it was
recorded in 2015, 2016, 2017 and 2018 as 6.9, 6.9, 7.0 and the 6.3 percentage which is more than
the unemployment situation in Australia.
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Inflation rate
Australia
c 2015 2016 2017 2018
Inflation rate 1.7 1.5 1.9 1.9
In Australia, there has been an increase in the consumer price by 0.6 % in the second quarter of
2019 as compared to the first quarter. There can be pushed in the inflation prices as there are
pick up in the growth of the wage and the early signs of the bottoming out in the house price in
the east coast. There is an expectation of inflation to be at 2.3 % in the year 2019.
The inflation rate condition of Canada is better than Australia as their rate of inflation is 1.1,1.4,
1.6 and 1.8 percentage in the year 2015, 2016, 2017 and 2018. There is not much difference in
the inflation rate of Canada and Australia in the year 2018. As after noticing the trends it can be
said they the inflation rate of both these countries can go at a similar rate (Focus economics,
2018).
Trade
Australian trade balance
Years 2015 2016 2017 2018
Trade Balance (USD billion) -13.1 3.1 10.0 15.8
There was a deteriorating period of the Australia in the year 2015 when it comes to the trade
balance of the country as there was the negative balance in the trade after that the country has
witnessed the tremendous progress in the area of trade as in 2018 it got the positive figure of
15.8 in terms of dollar which have helped in the economic development of the Country
(McCombie, 2016).
The trade balance of Canada is poor as compared to the trade balance of Australia as in the 4
years of time 2015-2019 it had shown continuously negative balances at the -19 which can harm
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the economic growth of Canada. So it is important for the country to maintain the trade balance
for the development.
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The major issues which can occur in the coming 12 months are as follows:
Fall in income
In case if Australia pursued the Zero growth strategy that can put the impact on the total output
of the economy as it can become stagnant, as the population will also grow and productivity will
also be increased. Which can further result in the fall in the income and living standards of the
people, increase in the inequality which can also result in the dissatisfaction among the workers
which can make them unproductive and demotivated (The Guardian, 2019).
The rise in the Unemployment rate
The unemployment rate of Australia is already at 5.8 % which increases day by day which can
become a major issue in the coming times. As the estimation done by the center for future work
estimates that even though there is a high level of workforce participation but still there are three
million Australian who are either unemployed, underemployed or are the peoples who would like
to work but are not looking for it. Even if the Australian government achieves the target if 1.25
m of the new jobs it may not be sufficient enough to solve the problem of unemployment in
Australia (The Guardian, 2019).
Infrastructure and Capital investment
With huge growth in the Population of Australia there will be huge requirement of the
investment in the infrastructure and building of the capacity on the longer-term basis. There can
be major issues related to the population problem in Australia for which the conditions and
capacities of the rail, roads, and airports are needed to be improved. It can be a challenge for
Australia in coming time to provide attractive returns to the investors on one hand and efficient
planning and execution of the projects related to the infrastructure on the other hand (Public
telegraph, 2019).
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Conclusion
By understanding this report it can be estimated that the economic condition of Australia in the
year 2019 is far better than the situation in the year 2015. As by considering the economic factors
itself such the economic growth it has been learned that GDP of the country in the year 2015 was
2.5 and now it came up to 2.9, in case of the Unemployment rate it can be said as negative as
there is a rise in the unemployment rate in the year 2019 as compared to the year 2015. In case of
the inflation rate an increase can be seen yearly but in case of the trade balances Australia has
made huge progress in the economy in the year 2019 as compared to the year 2025. So, overall
there might be some issues but the economy of Australia is in decent condition.
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References
 Bishop, J. and Cassidy, N., 2017. Insights into low wage growth in Australia. RBA
Bulletin, March, pp.13-20.
 Focus economics, 2018. Australian economic growth. [Online] Focus economics.
Available at: https://www.focus-economics.com/countries/australia [Accessed: 18
September 2019]
 Focus economics, 2018. Inflation in Canada. [Online] Focus economics. Available at:
https://www.focus-economics.com/country-indicator/canada/inflation [Accessed: 18
September 2019]
 McCombie, J. and Thirlwall, A.P., 2016. Economic growth and the balance-of-payments
constraint. Springer.
 Public telegraph, 2019. Economic challenges ahead of Australia. [Online] Public
telegraph. Available at: http://publictelegraph.com/economic-challenges-opportunities-
ahead-australia-2/ [Accessed: 18 September 2019]
 Shahiduzzaman, M. and Alam, K., 2014. Information technology and its changing roles
to economic growth and productivity in Australia. Telecommunications Policy, 38(2),
pp.125-135.
 The Guardian, 2019. The no-growth future. [Online] The guardian. Available at:
https://www.theguardian.com/business/2019/aug/14/the-no-growth-future-has-australias-
economy-finally-run-out-of-luck [Accessed: 18 September 2019]
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