An Analysis of Australia's Relationship With the Global Economy

This essay provides a comprehensive analysis of the relationship between the Australian economy and the global economy. It begins by establishing the interconnectedness of Australia with the world, particularly in terms of financial policy and trade. The essay then explores various factors influencing this relationship, including financial crises, GDP growth rates, investments, employment and unemployment rates, and inflation rates. It highlights Australia's resilience during global financial downturns, supported by data and comparisons with other developed economies. Furthermore, the essay delves into specific aspects like mining investments and their impact, along with discussions on inflation and unemployment trends. It concludes by summarizing the key findings, reinforcing Australia's adaptability and continued economic growth within the global context, with references to various sources to support the analysis.

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Relationship between Australia and the global economy
Introduction
The Australian economy has never worked in seclusion from the globe (Lenzen et al 2012,
p.8375). This is obvious with regards to money related arrangement. The objectives of the
money related approach are particularly local, as far as inflation and employment are concerned
among other factors in Australia. The Australian economic system is open to the globe. This
means that adjustments in other countries' concern in their products and corporations will have
crucial implications for its economy. There are countless that my study mulls over in settling on
this economic relationship, both Australian and worldwide.
The worldwide impacts on the setting of the economic policies in action in Australia are
historically low but it is not a small part because policies globally are also in historically low
rates (Huber and Stephens, 2010). There are reasons as to why the worldwide policy rates are
going down. Australia and the world are encountering a strange time of progress and change.
The worldwide financial crisis is pushing towards the developing business sector economies and
far from the propelled economies. The quick pace of globalization and the financial re-
commitment of no less than 33% of the total populace joined with the inconveniences tormenting
portions of the created world have brought about a 'multispeed' worldwide economy.
There are four common worldwide variables that have prompted the expansionary economy
related approach settings seen in most exceptional economies for about 10 years. They are
available in Australia to differing degrees. The policies and the decrease over the previous
decade in Australia and the economy difference is discussed.
The Australian trade economy

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The open Australian trading economy has: ten of the countries fundamental twelve convey
business divisions in Asia and Oceania, two-way trade items and ventures totaled A$763 billion
out of 2017, remote theory stock totaled around A$3.6 trillion and inner remote direct hypothesis
stock came to A$849 billion of each 2017 (Karunaratne 2010, p.81). The Benchmark Report
gives rich information showing why there is no preferable spot over Australia to work together
with.
The economic freedom in Australia is now at 80.9% and that makes it the 5th freest in the Human
Development Index in 2019 (Lacey, Ashworth and Witt 2019, p.79). This score has been
maintained since 2018, but there is a slight score rise in the labor market freedom, trade, fiscal
health, and government integrity. Australia is 4th ranked after Hongkong, Singa pore and New
Zealand proceeding. This rank is among the 43 Asian-Pacific region countries and its world and
the regional score is above the average. This was impacted by the trade terms during the
economic boom between 2004 and 2011 as seen earlier. Below are some of the things which
make it among the wealthiest and most competitive worldwide which are in line with the trade
terms during and after the economic blast.
The relationship between Australia and the world economy is based on; financial crisis and the
GDP growth rates, investments, the employment and unemployment rates, inflation rates,
exchange rates among others (Baker et al 2016, p.1595). These are the main economic pillars
which bring about its competitiveness to the globe. Some of these issues brought about trade
terms because of the increased demand for the Australian’s exports by the other nations.
The financial crisis and the GDP growth rate

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Clear factor impacting economy related arrangement settings all-inclusive are the consequences
of financial wrangles. In 2007 and 2008, there was a notable fast decline in the policy rate
settings (Stockhammer 2010, p.40). Numerous approach rates were decreased to near zero and
along these lines, now and again, even beneath zero. The breakdown in worldwide yield and
trade toward the finish of 2008 was sharp and critical. The seriousness of the scene was
expanded by the way that it was synchronized over the worldwide economy.
The diagram showing the cycles of the worldwide financial crisis
Financial crisis effects in many parts of the world’s economy have shown that it can be
dependable. For the past decade, the development of the global economy has fallen drastically.
The huge economic and financial crisis in the year 2008 and 2009 has made the world’s
economic development remain in a constant even after the expansionary financial policy settings.
There is an exception from the rest of the world, Australia shows some changes.

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The reason as to why Australia does not feel the effect of the financial constraints is because it
was not hit hard by the 2008/09 financial crisis. It is evident that the growth of GDP in Australia
from 2007 has shot by 27% (Wiedmann et al 2015, p. 6271). In correlation, in the US 13%; in
the United Kingdom zone by 10% and the eurozone, the percentage significance of the Gross
domestic product started growing in 2015. The economy of the globe has improved without
many problems just as from some few years ago. This is evident because of the industrial better
production and exports over an expansive swathe of the worldwide economy. In this way,
Australia has the 8th most raised Gross domestic product of customary resources, regarded at
US$19.9 trillion.
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
GDP Growth Rate (Annual %)
GDP Growth Rate
Year
GDP Growth Rate
A graph of Australia’s GDP in the past 10 years
The GDP average growth rate in Australia in the past 27 years is at an average of 3.2% given that
goods 2.1% and 3.4% of the services offered. This GDP growth is pretty higher than all the

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major developed economies like 2.5% in America, 2.1% UK, 1.6% in France, 1.4% in Germany
and 0.9% in Japan (Johansson et al 2012).
Investments
Australian speculation elements on the investments have been unmistakably unique. Differently,
investments in Australia have increased with a greater range as compared to the other countries
in the world and this is because of the proper exploitation of their resources (Agarwal et al 2014,
p.6496). As for the recent years, the other countries have shown a slight growth due to the
implementation of investment on their resources too. It is said that investments at some point fell
nearly back to the pre-boom levels. Lately, in different countries across the globe, there has been
a positive drive on the sector of resources exploitation. The reflection of investment growth in
other countries shows that there is the hope of further investment growth in Australia too after
idea borrowing.
A diagram showing some factors affecting investments and the driving aspects.
Investments in mining: The phenomenal item cost increments set off a gigantic measure of
interest in mines and mining framework crosswise over Australia (Hajkowicz et al 2011, p.30).
As costs for items expanded, mining firms were quick to build creation to benefit from the more
expensive rates. To remove more wares, mining companies expanded pre-existing mines and
developed new ones, inciting the greatest resources theory impact in Australian history. Over 50

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years making ready to the terms of trade impact, mining investment had discovered the center
estimation of basically over 1.5 percent of GDP. Mining theory had extended five-overlay from
its measurement from 2004 to 2012 that is from $20 billion to $130 billion, peaking at 9 % of
Gross Domestic Product.
Progressive growth in investment is encapsulated in the RBA's development figure of demand
and supply curve.
Commodities demand and supply curve
Interest newly on mineral excavation framework implied that Australia had the capacity of
sending out progressively iron mineral, gas and coal hence moving the items supply from S1 to
S2, because of the underlying upward demand from D1 to D2. As this extra supply ended up
accessible, interest for items from China and different pieces of Asia moderated thus request

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moved back from D2 to D3. Joined impact of the expansion in demand and supply sought after a
decrease in ware costs and terms of exchange in Australia with costs tumbling from P2 to P3 and
amounts expanding from Q2 to Q3.
Inflation rates
Another factor is the sustenance of low inflation rates which is very evident across the whole
world for the past 10 years. There has been a continual disinflationary weight coming about
because of the China activities impacts on the worldwide economy (Subramanian, 2011). Signs
show that this issue may disappear, with the development of produced goods in China, this will
lead to constant years of decline. All through the previous decade, assumptions regarding future
inflation have remained extensively moored, which, now and again, has helped fight off a move
towards emptying, yet right now might hose the possibilities of a continued get in inflation
worldwide.
The global economy financial crisis in 2008 caused the highest inflation increase. Comparison
between Australia and the global is quite significant such that Australia has maintained between
1.3% and 1.8%. Different economies in the world show different inflation rates.
Unemployment rates
Unemployment rates in Australia ratio to that of the world; whereby Australia once in a while
adjusted joblessness rate rose to 5.0 percent in 2019 from a nearly eight-year low of 4.9 percent
in the prior month and organizing business sector demands (Duval, and de la Maisonneuve 2010,
p.60). This economy had 25,700 occupations while the amount of joblessness extended by
17,100. This rate in Australia found the center estimation of 6.84 percent from 1978 until 2019,
accomplishing different records of 11.20 percent in 1992 higher and lower by 4 percent in 2008.

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
4.4
4.6
4.8
5
5.2
5.4
5.6
5.8
6
6.2
Unemployment Rate (Annual %)
Unemployment Rate
Year
Unemployment Rate
The global unemployment rate started decreasing slowly from 5.9% by 2009 (Gereffi, and
Frederick, 2010). In 2014, this stabilized at 5.5% having about 192 million unemployed persons.
In 2017, about 1.4 billion people are said to have been in vulnerable employment and
additionally about 35 million are stated to be expected to join them in this year 2019.
The
graph
showing the global unemployed population and the unemployment rate
2003
2005
2007
2009
2011
2013
2015
2017
0
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Global Unemployment Rate (%)
Global Unemployment Rate (%)
Year
Unemployment Rate (%)

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A diagram showing all the effects of unemployment on any economy in the world
Conclusion
In conclusion, the impacts of these worldwide effects on the Australian economy have been
material. Australian business will keep on adjusting effectively. The rates of growth of the GDP
in Australia has shown its competitiveness in the globe. In reference to its position right now it is
destined to a greater state in the coming future. The average growth rate of Australia GDP in the
past 27 years is at an average of 3.2% given that goods 2.1% and 3.4% of the services offered.
This GDP growth is pretty higher than all the major developed economies like 2.5% in America,
2.1% UK, 1.6% in France, 1.4% in Germany and 0.9% in Japan.
The unemployment rate decrease shows its progression on economic growth and it is clear that it
has a lower rate of unemployment which is at 5.0% compared to some parts of the world with
around 11% unemployment rates. Inflation rates are stated to be somehow stable in Australia

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whereby it stumbles between 1.3% and 1.8% which means its one of the industrialized
economies and the stability is pretty good.
The worldwide financial condition and worldwide strategy settings that have been set up for as
long as a decade has contributed altogether to the money related arrangement settings in
Australia. Australian industry has constantly faced nonstop change, many have adjusted
effectively and flourished.

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References
Agarwal, R., Brown, P.J., Green, R., Randhawa, K., and Tan, H., 2014. Management practices of
Australian manufacturing firms: why are some firms more innovative?. International Journal of
Production Research, 52(21), pp.6496-6517.
Baker, Scott R., Nicholas Bloom, and Steven J. Davis. "Measuring economic policy
uncertainty." The quarterly journal of economics 131, no. 4 (2016): 1593-1636.
Duval, Romain, and Christine de la Maisonneuve. "Long-run growth scenarios for the world
economy." Journal of Policy Modeling 32, no. 1 (2010): 64-80.
Gereffi, Gary, and Stacey Frederick. The global apparel value chain, trade, and the crisis:
challenges and opportunities for developing countries. The World Bank, 2010.
Hajkowicz, S.A., Heyenga, S. and Moffat, K., 2011. The relationship between mining and socio-
economic well being in Australia’s regions. Resources Policy, 36(1), pp.30-38.
Huber, E., and Stephens, J.D., 2010. Development and crisis of the welfare state: Parties and
policies in global markets. University of Chicago Press.
Johansson, Åsa, Yvan Guillemette, Fabrice Martin, David Turner, Giuseppe Nicoletti, Christine
de la Maisonneuve, Guillaume Bousquet, and Francesca Spinelli. "Looking to 2060: Long-term
global growth prospects." (2012).
Karunaratne, N.D., 2010. The sustainability of Australia's current account deficits—A
reappraisal after the global financial crisis. Journal of Policy Modeling, 32(1), pp.81-97.
Lacey, J., Ashworth, P. and Witt, B., 2019. Technology Assessment in Australia. Constructing a
Global Technology Assessment: Insights from Australia, China, Europe, Germany, India and
Russia, p.79.

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Lenzen, M., Kanemoto, K., Moran, D., and Geschke, A., 2012. Mapping the structure of the
world economy. Environmental science & technology, 46(15), pp.8374-8381.
Stockhammer, E., 2010. Financialization and the global economy. Political Economy Research
Institute Working Paper, 242, p.40.
Subramanian, A., 2011. Eclipse: Living in the shadow of China's economic dominance. Peterson
Institute.
Wiedmann, Thomas O., Heinz Schandl, Manfred Lenzen, Daniel Moran, Sangwon Suh, James
West, and Keiichiro Kanemoto. "The material footprint of nations." Proceedings of the National
Academy of Sciences 112, no. 20 (2015): 6271-6276.