Macroeconomics of Australia

Macroeconomics Issues of Australia

Multispeed Economy of Australia

Australian economy is a multi speed economy because it is doing good economically in one area and is very weak in the other areas. Its performance is good as far as mining is concerned but other area like manufacturing industry, tourism industry; construction and retail business are very weak due to economic downfall of Europe and US. Australian economy was very strong and stable even in the toughest of time when other countries were facing issue of recession. Companies in other countries like US and Europe were laying off people and increasing taxes and interest rate to control the economic downturn. Inflation gave rise to less spending on part of the people. On the other hand in Australia business community was doing good and growing at a stable rate. It is after 2009 that the behavior and trend in business community of Australia started to change. Business community people became more concerned and vigilant in their activities. Many companies laid off people to cut down their costs (Newport Consulting). The normal behavior of many businesses in Australia is to cut down on their cost by decreasing their level of operation and number of employees working for them. Such industries where the growth is sluggish and slow, many people have lost their jobs.

Australian economy is doing well in one department that is of mining while the other areas of businesses are suffering. There is too much pressure on the mining industry to eliminate the negative effects of other industries and also maintain the value of Australian dollar high as compared to the US dollar. There are different types of industries operating in Australia that can be divided into two sections, gainer and losers. Industry that is growing and improving with time is that of mining, a booming sector of the country which is to cover up on behalf of other industries. The industries with sluggish growth come under lagging sector, like manufacturing, construction and retail. Minding industry of Australia grew by 90 percent which gave rise to Australian GDP by 47 percent. Additionally, there were more requirements of coal and iron ore which increased the exports of Australia and increase in the value or iron ore and coal by 140 percent. This was known as two speed economy by many experts. This increased the Australian dollar rate which had negative impacts on all most of the non mining industries. Global economic downturn was also the cause of changing economic conditions of Australia that came in the picture at a very later stage. But the main cause of problem in the country was its multi speed economy. Mining industry was the booming industry, other industries that started declining were in the lagging sector and those that have little chances of growth came under non-tradable sector. Non tradable sector included service industry that also made up an important part of Australian economy. Main benefit of this increased output and revenue from mining industry is that it ...