Business Macroeconomics Assignment 2012



Business Macroeconomics Assignment 2012

Australia's multi speed economy

The economy in Australia has seen a massive shift. As per the economists, the economy of Australia is what we call the two speed economy. This two speed economy is expected to widen the gap further in the future. A two speed economy is where the parameters that affect the rich and poor in a country are very different from one another. This is a scenario where the government fails to control the flow of the economy.

The dwindling of the Australian dollar has put immense pressure on some of the key industries in the country. The manufacturing job registered a decline of 22,000 jobs. This was a further 2.2 percent decline from the already high rate of unemployment in the manufacturing sector. The decline in the tourism, recreation and art sector has been collectively noted as 4.5 percent (Goel, 2008). The current trend of the economy is towards the workers in the mining industry also referred to as the resources boom. This means that the resources such as the mining will be doing very well while the other sectors of the economy will be maintaining a pace very different from the mining industry.

Australia in the past has been running on a trade surplus. This, however, will not be the case anymore and will be coupled with a sharp decline in gross domestic product for the year. If we look at Australia during the global financial crisis, the performance of the banking sector is much better that that of United States of America. The outlook for the economy in the future is positive whereby the focus of the performing economy will be on the mining and the energy products industry. However, there are always winners and losers in a multispeed economy.

In context with the earlier discussion, it is evident that businesses related with the mining and energy sector will be growing a great deal. As per the statistics published by WA Department of Mines and Petroleum, the capital that is there in the mining and resources industry, 63 percent of it was invested back in the year 2010. The investments waiting to get their final approval were worth $170 billion in the year 2011 (Lowe, 2011). This also means that the demand for the skilled labour will increase. The increase in demand for skilled labour will lead to an increase in the pay for these skilled labourers.

There are certain states in Australia which are rich in resources. The impact of the boom in commodities will be most profound for these states. In the past decade, the increase in the national population coupled with a boom led to the soaring of property prices in these regions.

The prices for both commercial and non-commercial property went very high. Lately, the trend has changed on the flip side and the housing prices have gone down considerably. In certain instances, they have gone down by more than 50 ...