AUSTRALIAN ECONOMY

Australian Economy



Australian Economy

Part A

How successful have the Australian Government and the Reserve Bank of Australia been in running the Australian economy over the last two years?

Australia has one of the strongest economies in the world, open and competitive. The steady economic growth is the result of coherent management of public policies and continuing structural reform. It is also blessed with rich natural resources (Howart, 2010, pp. 8). Furthermore, Australia's economic activity will be augmented by commodity exports, especially to China. The rapid expansion of Asian economies in recent years notwithstanding the current global recession offers new opportunities for diversifying trading ties from core European markets.

Australian Economy

The Australian economy expanded by 0.7% quarter-on-quarter (seasonally adjusted) in Q410, dragged down by weak performance in both investment and private consumption, a trend which we believe will remain prevalent in 2011. Full-year growth came in at 2.7% (slightly lower than our estimate of 2.8%) and should decelerate to 2.4% and 2.6% respectively in 2011 and 2012 respectively (www.morganwealth.com.au). Gross Domestic Product of Australia has risen by 0.4% in the first three months of 2009, following the 0.6% contraction suffered in the fourth quarter of 2008, as reported by the statistics office today.

Australian GDP

Australia is one of the few countries that have experienced economic growth in the last quarter, along with China and India, which has led to stock markets and local currency (Guest, 2011, pp. 90). Economists recognize that much of credit on the recovery of the economy is the measures taken by the Government and the Australian central bank. Consumer spending rose 0.6% in the first quarter, adding 0.3% to GDP and exports advanced 2.7% (http://www.rba.gov.au).

Australia's real GDP growth came in at 0.7% quarter-on-quarter (q -o-q, seasonally-adjusted), rising from a revised 0.1 % in the end of 2010. The recent quarterly improvement in growth helped the country attain full-year growth of 2.7%, slightly lower than our 2.8% estimate. As we believe private consumption growth will be sluggish in 2011, a moderation in growth should be in order (Cork, 2011, pp. 56). We expect debt deleveraging by consumers and businesses to remain the biggest influencing factor this year, supporting our view that these two major expenditure components will contribute less to overall economic expansion this year. With this in mind, we are penciling in 2.4% growth for the Australian economy, in 2011, and 2.6% in 2012 (Lowe, 2010, pp. 17).

Year

Inflation Rate

GDP

Balance of Payment Billion ($)

Exports (Billion $)

Imports Billion $

2009

1.8%

1.20%

-5.6

154.8

160.4

2010

2.9%

2.70%

10.3

210.7

200.4

Growth Rate of Australia

Year

GDP

2009

1.20%

2010

2.70%

High rate of economic Growth

The Growth Domestic product of Australia has been an increase from the last year in 2009; the GDP of Australia was 1.20%, in the year 2010, the GDP increased by 1.50%. Australia has long and consistently demonstrates a high rate of economic growth. GDP growth averaged over the past years has been above 4%, which is higher than in Germany, UK and USA. Even in the face of global economic crisis ahead of the Australian economy performance indicators of leading countries of the world and 2 times higher ...