The economic condition of a country is determined by both the factors that are out of the managing capacity of its governing body and directly implemented macroeconomic policy. The main purpose of this study is to assess and describe current economic situation of Australia and the macroeconomic strategies implemented by the government to endeavour and uphold a level of sustainable development. This study reveals that the Reserve Bank Australia’s (RBA) wants to maintain the present currency rate at 4.5%. The study also delineates the present relative steadiness of the Australian economy and present macroeconomic position as motivating. Australia has reached a verge of using fiscal policy to alleviate the macroeconomic effects of the Global Financial Crisis. Since the debt of Australia is very small in comparison to the international standard, the country could well afford to do the job. “Even after several years of sizeable fiscal deficits, the net federal debt is still less than 10 per cent of GDP” (Weber 2012, p. 3). The essential characteristic of a well-organised fiscal system is its capability to guide and direct funds from depositors to borrowers. Banks and deposit takers offer this function, allowing deposits and granting the debt into investment markets. Offering this loan to borrowers, they function typically at longer maturities. In this process of effective financial intermediation, depositors and other borrowers should have a satisfactory degree of confidence that their money is safe.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Success of the Australian Government and the Reserve Bank of Australia
- The Current Economic Situation of Australia
- External Comparison
- Australia's Economy through GDP Components
- Net Exports
- Depositor Protection in Australia
- Unemployment Rate
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This study aims to assess and describe the current economic situation in Australia and the macroeconomic strategies implemented by the government to achieve sustainable development. It analyzes the country's response to the Global Financial Crisis (GFC) and its current economic standing in a global context.
- The stability and growth of the Australian economy despite global crises.
- The effectiveness of Australian government macroeconomic policies in response to the GFC.
- Analysis of Australia's GDP growth through its components (consumption, investment, government spending, net exports).
- The role of depositor protection and its impact on financial stability.
- Trends in Australia's unemployment rate and its comparison to other OECD countries.
Zusammenfassung der Kapitel (Chapter Summaries)
Introduction: This introductory chapter sets the stage for the study by outlining the factors influencing a country's economic condition – both internal policy and external forces. It establishes the study's primary objective: to evaluate Australia's current economic state and the government's macroeconomic responses aimed at sustainable development. The chapter highlights the Reserve Bank of Australia's (RBA) target currency rate and introduces the context of Australia's relatively low debt levels, emphasizing the nation's capacity for fiscal policy interventions to mitigate the impact of the GFC. The importance of a well-functioning financial intermediation system is also underscored.
Success of the Australian Government and the Reserve Bank of Australia: This section focuses on the achievements of the Australian government and the RBA in navigating the global economic challenges. It emphasizes the stable position of the Australian economy, contrasting it with the global crises that impacted other countries. Specific examples, such as the government's swift action to secure the financial system during the GFC through bank guarantees and support for credit access, are presented. The chapter highlights the significant GDP growth rate achieved despite the global downturn, indicating economic resilience and successful policy implementation.
The Current Economic Situation of Australia: This chapter delves into the specifics of Australia's economic performance. It presents data demonstrating a stable and positive economic outlook. The chapter highlights the country's consistent annual GDP growth rate, comparing it to its 30-year average, and projects further growth for the coming financial years. This section utilizes statistics to paint a picture of a healthy and growing economy, emphasizing the success of the government's proactive measures.
External Comparison: This section provides a comparative analysis of Australia's economic performance against other comparable countries in the context of the GFC. The significant achievement of escaping technical recession, demonstrating positive growth while other OECD nations experienced downturns, is highlighted using figures and statistics. The chapter directly contrasts Australia's performance with that of countries in Asia, the US, the Euro area, Japan and New Zealand, emphasizing the nation's relative economic success.
Australia's Economy through GDP Components: This chapter analyzes the components of Australia's GDP – consumption, investment, government spending, and net exports – providing insights into the drivers of economic growth. The chapter utilizes an equation to demonstrate the breakdown of GDP and then explores each component, including consumer spending increases and the impact of a trade surplus. This multifaceted approach offers a granular understanding of the factors contributing to the overall GDP growth.
Net Exports: This section specifically examines the impact of net exports on Australia's GDP, considering the role of the current account deficit. It details how the reduction of the current account deficit, coupled with a trade surplus (driven by strong demand for Australian mineral exports), positively affected GDP growth. The chapter demonstrates the interplay between international trade and domestic economic performance.
Depositor Protection in Australia: This chapter focuses on the measures taken to ensure depositor confidence and financial stability within the Australian banking system. It highlights the robust prudential regulations and supervision, the depositor's preference in case of ADI failure, and the strengthening of depositor security arrangements through the Financial Claims Scheme (FCS). The chapter discusses the role of the FCS in providing government guarantees for deposits, emphasizing the government's commitment to protecting depositors and maintaining financial stability.
Unemployment Rate: This chapter analyzes trends in Australia's unemployment rate, particularly its response to the GFC. It notes the rise in unemployment during 2009 and its subsequent decline the following year, explaining some of the contributing factors like reduced contribution rates and the discouragement of long-term unemployment. This section uses the unemployment rate as an additional indicator of overall economic health, comparing Australia's relatively low rate with that of other OECD countries.
Schlüsselwörter (Keywords)
Australian economy, macroeconomic policy, Global Financial Crisis (GFC), GDP growth, consumption, investment, government spending, net exports, current account deficit, depositor protection, unemployment rate, Reserve Bank of Australia (RBA), fiscal policy, OECD.
Frequently Asked Questions: Analysis of the Australian Economy
What is the overall purpose of this document?
This document provides a comprehensive overview of the Australian economy, focusing on its performance during and after the Global Financial Crisis (GFC). It analyzes macroeconomic policies, GDP components, unemployment rates, and depositor protection measures, comparing Australia's economic resilience to other OECD countries.
What topics are covered in this analysis of the Australian economy?
The analysis covers a range of key economic indicators and policies, including:
- The success of Australian government and Reserve Bank of Australia (RBA) policies.
- The current economic situation in Australia, including GDP growth and its components.
- A comparative analysis of Australia's economic performance against other countries.
- The role of net exports and the current account deficit.
- The effectiveness of depositor protection measures in maintaining financial stability.
- Trends in Australia's unemployment rate.
What is the main finding regarding the Australian government and RBA's response to the GFC?
The analysis highlights the success of the Australian government and RBA in navigating the GFC. Swift policy interventions, such as bank guarantees and support for credit access, helped maintain economic stability and growth, contrasting with the downturn experienced in many other countries.
How is Australia's economic performance assessed in this document?
Australia's economic performance is assessed through various indicators, including consistent GDP growth, low unemployment rates compared to other OECD nations, and a relatively stable financial system. The analysis uses data and statistics to illustrate these positive trends.
What are the key components of Australia's GDP, and how are they analyzed?
The analysis examines the four main components of GDP: consumption, investment, government spending, and net exports. Each component is analyzed to understand its contribution to overall economic growth. The impact of a trade surplus and the reduction of the current account deficit are highlighted.
What role did net exports play in Australia's economic growth?
The reduction of the current account deficit, coupled with a trade surplus (primarily driven by strong demand for Australian mineral exports), significantly contributed to Australia's GDP growth. The analysis demonstrates the positive interplay between international trade and domestic economic performance.
What measures were taken to ensure depositor confidence and financial stability?
The analysis emphasizes the robust prudential regulations and supervision in the Australian banking system, the Financial Claims Scheme (FCS) providing government guarantees for deposits, and the strengthening of depositor security arrangements to maintain confidence and stability.
What are the trends in Australia's unemployment rate, and how does it compare to other countries?
The analysis notes the rise in unemployment during 2009 following the GFC and its subsequent decline. Australia's unemployment rate is compared favorably to other OECD countries, highlighting its relatively low rate as an indicator of overall economic health.
What are the key takeaways from this analysis?
The key takeaway is that Australia demonstrated significant economic resilience during and after the GFC. Effective macroeconomic policies, robust financial regulations, and proactive government interventions contributed to stable growth and positive economic outcomes compared to other global economies.
What keywords best describe the content of this document?
Australian economy, macroeconomic policy, Global Financial Crisis (GFC), GDP growth, consumption, investment, government spending, net exports, current account deficit, depositor protection, unemployment rate, Reserve Bank of Australia (RBA), fiscal policy, OECD.
- Quote paper
- John Mutunga (Author), 2012, Developing and understanding of Australia's economy over the last two years, Munich, GRIN Verlag, https://www.grin.com/document/269375
