Economy Of Australia Considered Developed †Myassignmenthelp.Com

Question: Discuss About The Economy Of Australia Is Considered As One Of The Developed? Answer: Introduction: The economy of Australia is considered as one of the developed and largest mixed economies in the world having a GDP of AUD $1.67 trillion for the year 2016. The total wealth of Australia is AUD $8.9 trillion for the year ended June 2016 (Taussig, 2013). In the year 2016, Australia was regarded as the 12th largest economy in terms of the nominal GDP and regarded as the 19th largest measured by the PPP adjusted GDP standing approximately around 1.0% of the world economy. Australia is considered as the 25th largest exporter and 20th largest importer. The economy of Australia is dominated by the service sector consisting of 73% of GDP. The mining sector on the other hand comprises of 7% of the GDP along with services to mining and attaining a height of mining boom in the year 2009-10. The total amount of value added of the mining industry stood 8.4% of the GDP (Frank et al., 2015). The economy of Australia is mainly reliant on the mining and agriculture sector, which is relative to the other developed countries as the products are exported to the eastern Asian market. In spite of the recent decline, the economy of Australia has been resilient and stable since July 1991. Production Output Performance Analysis: Real GDP: Real GDP is understood as the macroeconomic measure of the value of economic output adjusted for the changing prices. The adjustment transforms the monetary value measurement and the nominal GDP into the index for the quantity of total output (Sloman et al., 2013). The real GDP of Australia stood 1204.62 billion US dollars in 2016. The GDP value of Australia stood 1.94 percent of the world economy. The GDP of Australia averaged 4.1.44 USD Billion from 1960 until 2016 and reached an all time high of 1567.18 USD billion in the year 2013. Figure 1: Real GDP of Australia (Source: Tradingeconomics.com 2017) Real GDP Growth Rate: The Real GDP Growth Rate measures the economic growth concerning the gross domestic product (GDP) from one period of to another period adjusted for inflation (Bernanke et al., 2015). The Real GDP Growth Rate is expressed in the real opposed to the nominal terms. The economy of Australia rose by 0.3 percent in the month of March quarter 2017 in comparison to the 1.1 percent growth in the quarter of December 2016. Positive assistance was made from final domestic demand and alterations that were made in the inventory were unable to counterbalance the feeble net trade and dropped in dwelling investment (Georgellis et al., 2015). At present Australia has recorded 103 quarters with only two succesive quarters of depressing growth that is regarded as the longest extend of any urbanized nation. The GDP growth rate of Australia for the year ended 2016 stood around 0.86. Figure 2: Australia GDP Growth Rate (Source: Tradingeconomics.com 2017) Real GDP per capita Analysis: The gross domestic product per capita of Australia that was last recorded for the year 2016 stood 55670.90. On analysis, it is understood that the GDP per capita in Australia is equivalent to the 441 percent of the worlds average GDP (Tradingeconomics.com 2017). The GDP per capita in Australia averaged 35885.61 USD from 2000 to 2016 and attained an all time high of 55670.90 USD in 2016. Figure 3: GDP per Capita (Source: Tradingeconomics.com 2017) Performance trend of the economy: The Australias domestic gross domestic growth of 2.8 percent in 2015-16 and reported a lower rate of unemployment of 5.6 percent and the places the country in the good position for the future. Considering the performance trend the Australian economy has continued to shift away from the resources. Australias current economic strength has depended heavily on the resource boom, which is presently transitioning into its production phase (Tradingeconomics.com 2017). From the year, 2012-13 and 2015-16 the volume of iron ore and concentrates produced stood 66.3 percent higher from 2008-19 and 2011-2012. However, the increase in the volume of commodity and lower amount of international demand have contributed in the reversing the appreciation of the Australian dollar from the mining investment boom. The GDP growth can be broken down under the constituents drivers of household consumption, government spending, business investment and trade., Therefore, the real GDP of Australia rose to 2.8 percent in 2015-16 which was primarily driven by the household consumption. In contrast to this, the business investment declined by 1.7 percent points from GDP growth. This was primarily caused by the continuation declining business investment. Government measures to achieve production output performance: The Australian government has adopted investment in physical capital with the objective of improving labour productivity since the capital productivity is relatively slow to the change. This helps in providing direct link between the physical investment and production output (Tradingeconomics.com 2017). The Australian government is also embodied in the capital stock by undertaking initiatives to improve the technological aspects. The government have adopted measures in the areas of research and development in which the growth rate of technological progress largely dependent on the present level of technology on the quantity of resources that is devoted to the generation of new ideas and inventions. The government makes investment in human capital with the objective of raising productivity with evident changes in the production process. Labour Market Analysis: Unemployment trend based on unemployment rates: The seasonally adjusted rate of unemployment for Australia remained unaffected at 5.6 percent in June for the year 2016 from an upward modification of 5.6 percent in the month of May and it is reliable with the marketplace evaluations. The unemployment rate of Australia remained at the least possible level since the October 2016 as the Australian economy added 14,000 jobs however the number of unemployed person increased by 13100 (Richardson, 2014). In the month of June, the rate of seasonally adjusted labour force participation increased to a 17th month high of 65.0 percent from 64.9 percent in the earlier period that was beyond the market anticipations of 64.9 percent. Employment rose to 12,566,900, which was marginally lower than the market projections of 15,000 increases. The full time employment increased by 62,000 to 8,356,000 whereas the part time employment fell down by 48,000 to 3,810,800 (Tradingeconomics.com 2017). Unemployment increased by 13,100 to 728,100. The total num ber of unemployed person searching for full time work rose to 500,600 and the number of unemployed person looking for part time work augmented to 227500. Definition of unemployment and types of unemployment in an economy: Unemployment can be defined as the scenario where number of people willing to work or able to work is unable to discover work at the prevailing rate of wage. Types of unemployment: Cyclical unemployment: Cyclical unemployment occurs when an economy enters in the phase of recession and with loss of large number of jobs. Frictional unemployment: Frictional unemployment takes place due to the normal turnover in the labour market and the time taken by the workers to discover new jobs. Structural unemployment: Structural unemployment arises due to the absence of the demand for a certain type of worker. This is particularly due to the mismatches of necessary skills required by the employers and the skill possessed by the workers. Advancements made in the technology majorly leads to unemployment. Types of unemployment in Australia: The main types of unemployment suffered by the Australian economy are the cyclical and structural unemployment (Pigou, 2013). The cyclical unemployment in Australia is caused by the contraction of the economic activity of aggregate demand. With fall in aggregate demand, the derived demand for labour also falls. These results in loss of jobs and workers are laid off because of the falling demand of labour. In the year 2006, a shortage of skill rose because of the mismatch between the required skills by the employers and the skill offered by the employees. A majority of those rose due to the mining boom states of the Western Australia and Queensland. Government measures adopted to achieve full employment: The Australian government adopted the policies of increasing workforce training and educations under the Apprenticeships Centre to promote the skills creation of the employees. The government also implemented the policies of school based apprenticeship systems in order to develop the apprenticeship skills in school (Argy Nevile, 2016). Funding related to vocational and school educations comprised of National Education Framework for School to increase literacy and the standards of numeracy with the Australian national training authority to enhance the skill development of Australian workers. To address the long term unemployment, the government has made several changes in the welfare and system of taxation with the objective of strengthening the incentive and obligations of welfare recipients to seek the payment of casual workers. Price level analysis: The consumer prices in Australia increased by 1.9 percent in the quarter of June 2017 from 2.1 percent in the first quarter and below the market consensus of 2.2 percent rise. The rate of inflation edged lower from 2-1/2 high in the first quarter primarily because of the slowdown in the cost of housing and transport. The annual cost increased at a slower rate for housing and transport (Ormerod et al., 2013). Cost increased further in the food and non-alcoholic beverages to 1.9 percent from 1.8 percent. Based on quarterly basis the consumer price increased by 0.2 percent, which is below 0.5 percent in the first quarter and below the market anticipations of 0.4 percent increase. It is considered as the lowest amount ever since the march quarter of 2016. The most vital rise in price in this quarter is the medical and the hospital services tobacco and bear (Tradingeconomics.com 2017). This rise was particularly offset by the falling domestic holiday travel and accommodation and -2.5 perc ent fall in the automotive fuel. Figure 4: Inflation of Australia (Source: Tradingeconomics.com 2017) Definition and typical causes of inflation: Inflation can be defined as the rise in general level prices that are paid for goods and services over the period. The main causes of inflation are either demand-pull or cost-push inflation. The major causes of demand-pull inflation are the depreciation in the exchange rate resulting in increase in the price of the imports and reduce the cost of domestic exports in the overseas nation (Barros et al., 2015). Another cause of inflation is the higher demand from monetary stimulus such as lower direct and indirect taxes due to the higher government spending. Cost-push inflation simultaneously arises due to the increase in the cost of raw materials and other components. This may be due to the rise in the price of commodity such as oil and agricultural products. Rising cost of labour is also one of the cause of inflation as the cost of wages regularly increase when the unemployment is low since skilled workers become more scarce and this drives higher level of pay. Causes of inflation in Australia: The demand side factors have influenced the degree of aggregate demand in the Australian economy. With national spending running head of the production, wide amount of shortage in goods and service appears unsold with firms cannot access the additional resources so that it can lift the total output (Cumming Johan, 2016). This results in demand side inflation. The cost-push inflation in Australia has resulted in rise wages paid to the workers. During the year, 2013 and 2014 under the new enterprise wage agreement has added cost pressure and ultimately accelerating inflation. Government measure to achieve stable price: The Australian government has adopted the policy of contraction that involve higher rate of taxes by changing the rate of interest as the method of creating an impact on the degree of national spending or aggregate demand in the economy (Azad et al., 2014). Furthermore, the Australian government has also adopted the budgetary policy involving higher taxes and reducing the government outlays. This helps in reducing the spending by raising income collected from the personal and company taxes. Conclusion: To conclude with from the analysis it is found that the Australian economy has achieved growth at a rapid pace. In spite of the global financial crisis the economy of Australia has made significant impact with lower degree of recession. The GDP per capita and GDP has been relatively high which represents that the economy has expanded at a faster rate. The Australian economy is successfully moving the direction of achieving full employment since the rate of unemployment has been relatively lower for the economy. Being an open economy the government of Australia has also attracted foreign direct investment to attain the economic expansion with successful government policies of reducing aggregate demand. Reference List: Argy, V. E., Nevile, J. (Eds.). (2016).Inflation and Unemployment: Theory, Experience and Policy Making. Routledge. Australia GDP Growth Rate | 1959-2017 | Data | Chart | Calendar | Forecast. (2017).Tradingeconomics.com. Retrieved 11 August 2017, from https://tradingeconomics.com/australia/gdp-growth Australia GDP per capita | 1960-2017 | Data | Chart | Calendar | Forecast. (2017).Tradingeconomics.com. Retrieved 11 August 2017, from https://tradingeconomics.com/australia/gdp-per-capita Australia Inflation Rate | 1951-2017 | Data | Chart | Calendar | Forecast. (2017).Tradingeconomics.com. 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