Essay Preview: Australia Economics
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IntroductionOver the past two decades the Australian economy remains strong growth momentum without interruption. Australia’s industry component consists of five elements: in 2016, the highest proportion, 79.2 per cent, of output by industry is in the service sector, followed by construction, with 8.8 per cent and manufacturing, with 7.4 per cent. The two basic sectors, mining and agriculture are relatively small, as 1.9 per cent and 2.7 per cent respectively (Australian industry report team, 2016).According to statistics of Australia’s goods and services trading in 2016, Australia has three major trading markets in order are China (155,160 A$ million), the US (64,283 A$ million) and Japan (61,039 A$ million) (Australias trade at a glance, 2016). And the main goods and services that produced in the economy are Iron ores & concentrates: 16.3%; Coal: 12.8%; Education-related travel services: 6.7%; Natural gas: 5.4%; beef: 2.2%…etc.… (Australias trade at a glance, 2017). Based on the indicator of GDP we can found that Australia has a pretty strong economy. Generally, the Australia maintains a no-worries economy. On the other hand, Australia is the second country holds the record for the long period of recession-free growth.Production output performance analysisThe real GDP of Australia over the last decade ( 2006 – 2016)[pic 1]Real GDP is a measurement that reflects the value of all final goods and services produced by an economy of a country in a given year when the estimated price unchanged, and is often referred to as constant-price. There are two reasons why real GDP is important. It is used to calculate the GDP growth rate and real GDP also shows you how much the economy is producing. In order to estimate constant price GDP we express the values of all goods and services produced in a given year, based on the terms of a based period.Based on the real GDP graph above, we can see that real GDP of Australia continued growth from 330,000 A$ million to 42,000 A$ million within the last 10 years. Especially in a period of Global financial Crisis (GFC) in 2008 has impacted on Australias real GDP but not serious, that is shown on the graph above, in the global financial crisis, the Australian economy did not experience any recession, the real GDP fell slightly then continued to rise.The real GDP growth rate of Australia from 2006 to 2016[pic 2]Real GDP growth rate shows how fast the economy is growing. The real GDP growth rate is the annual change in percent of real GDP from one period to another, usually from one year to the next. Understanding the countrys economic growth rate is essential and extremely useful for government policymakers to come up with appropriate plans to achieve important goals such as controlling inflation and promoting economic growth. By comparing the current real DGP growth rate with the pace of real GDP growth rate of the previous period, we know the general trend of economic growth over time. At the same time, the real GDP growth rate is also useful for comparing the economies of other countries with different rates of inflation.From the chart of real GDP growth rate over the past decade above we can see that Australias real GDP growth rate is between one percent and five percent. From the highest level with real GDP growth rate at 5 percent in 2007 has a dramatically decline due to the impact of the GFC drop to the lowest at 1 percent in 2009. After that, in 2010 Australias GDP growth rate returned to growth and hit a near 4.5 percent in 2012. It then dropped to an average level that ranged from two percent to three percent from 2012 to 2016.
The real GDP per capita of Australia over the last ten years ( 2006 – 2016)[pic 3]Real GDP per capita used to compare living standards between different countries and over the years. Real GDP per capita is equal to the total economic output of a country divided by population and adjusted for inflation. Through it we can see the level of prosperity of each country with different population sizes. The rise in GDP per capita reflects the growth of the economy at the same time reflects the increase in productivity.Based on the above GDP per capita we can see in the last decade the level of GDP per capita in Australia ranged from USD 50,000 to USD 56,000. Between 2006 and 2010, because of the impact of the financial crisis, GDP per capita remained unchanged, ranged from USD 51,000 to USD 52,000, then in 2011 Australias GDP per capita experienced outstanding growth from USD 53,000 to USD 56,000.Government’s measures adopted to achieve the production output performance.During the global financial crisis that began in late 2007 and exploded in 2008 the Australian economy was affected but not too serious. One of the top reasons for the Australian economy to overcome the global crisis in a healthy state is thanks to these solid foundations: The Australian economy was debt-free, the economy was on strong momentum of development with considerable assets, and Australia has enormous trade terms with China. In fact, the trade between Australia and China increased strongly, up 15.6 percent to a record of $ 78.1 billion during this period. Due to at that time, China was in the process of rebuilding its infrastructure and urbanization, leading to huge demand for mineral purchases, and especially those from Australia. (Priestley, 2010). At the same time, one of the prerequisites for the Australian economy to avoid the recession is that the government has taken timely and proactive measures. Includes bank guarantee, bank wholesale funding and a $10.4 billion Economic Security Strategy package that helps households and financial institutions be protected against the effects of the global financial crisis. The fiscal strategy for the 2008-2009 budget package was a surplus of at least 1.5% of GDP; Used for banks rather than for expenditures with modifications of tax receipts. Simultaneously redirect expenditures and tax revenues to spend so that new expenditures can be fully offset by savings. Designed to allow the stabilizer to operate automatically.During the start of the GFC, Australian government was clearly aware that the financial crisis might worsen. The governments position has been strengthened by allowing automated stabilizers to operate and building a $ 21.7 billion surplus to provide for the future policy action. Households have been supported by government tax cuts, while the government also paid to pensioners and careers. At the same time the Reserve Bank of Australia acted promptly with financial institutions being provided with liquidity in a timely manner when the international currency market became inactive.