Australian Economy: Slowdown, Monetary Policy, and Future Outlook

This report analyzes the economic slowdown in Australia, examining the factors contributing to the decline, including the US-China trade war, the slowdown of the Chinese economy, and weak consumption and investment levels. It highlights the role of the Reserve Bank of Australia (RBA) in addressing the slowdown through monetary policy, specifically the reduction of the cash rate to stimulate economic activity. The report discusses the expected impacts of the RBA's actions on inflation, unemployment, and GDP growth, and provides a comprehensive overview of the current economic challenges and potential future developments for the Australian economy. The report emphasizes the interconnectedness of global economic factors and their impact on Australia's economic performance, making it a valuable resource for understanding the complexities of the nation's economic landscape and the policy responses to address them.

Economic Principles
and Decision Making
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Introduction
 Economy of Australia is experiencing a
turbulence in the recent times
 The rate of growth in Australia is slowing
down
 RBA has taken the measure to curtail cash
rate from 1.5% to 1.25%
 GDP growth rate is expected to fall to less
than the predicted 3%
 Slowing down in the Chinese economy is
also affecting the growth of the Australian
economy

Causes of economic slowdown of
Australia
 Trade war between the USA and China since
2018
 Slowdown of the economy of China, which is
the largest trade partner of Australia
 Slow growth of global economy
 Fall in terms of trade for Australia
 Slump in the housing sector, manufacturing,
mining and service sectors
 Weak consumption and investment level
within the economy, resulting in lack of flow
of money
 Fall in commodity prices

Monetary Policy by RBA
 RBA cuts the cash rate by 25 basis
points, reducing it to 1.25% from 1.5%
 Fall in cash rate encourages spending
and investment in the economy
 The money flow in the economy
increases maintaining stability in
inflation rate, unemployment and price
of currency
 It also promotes creation of jobs to push
the GDP growth to expected 3%

Conclusion
 Various factors contribute in the
slowdown of Australian economy.
 The US – China trade war, weak
consumption spending and investment
level within the economy and slump in
housing sector are the major reasons for
slow rate of growth and fall in GDP.
 Reduction in cash rate by RBA is
expected to push the economy and
maintain a steady growth in the future