Sample Essay on Factors Affecting Economic Growth in Australia
The year 2013 was tough economically for Australia, with most leaders and key players putting hopes in 2014. Economists argued that the country’s economy stagnated because of the election. Most people, including business owners were not ready to invest until the election was over. This significantly hampered growth. At this time, the economy was in the transition stage, with some sectors like mining exports and home construction. This means that Australia’s economy, like many economies of the world is affected by a wide range factors. In this paper, we shall discuss major factors affecting economic growth in Australia.
In understanding these factors, which shape the economy of Australia, it is important to underscore the fact that Australia’s economy has maintained a steady growth of 14.3% since the year 2008. Out of this, mining sector accounted for 3.2%, of which iron had 2.3%. Other sectors were healthcare with 1.7%, construction 1.4% and professional services at 1.6%. This means that, Australian economy largely depends on iron ore. It is worth noting that the economy grew by 19.8% between 2002 and 2007, with the finance sector accounting for 3.1%. From history, it is possible to deduce that the main drivers of Australia’s economy change with time on a regular basis and the trend is likely to continue even mining construction fades while mining exports take the lead. Nevertheless, other sectors are likely to rise and contribute to significant economic growth.
Another factor that determines Australia’s economic growth is the volatility of its dollar. In 2013, the country witnessed above-average volatility as the Aussie dollar operated within a range of 13.7 and 17.1 US dollars. Experts contend that this trend is likely to dominate throughout 2014 and the Aussie dollar is likely to pick from US80s to $90s. While this is the case, much of the differences will emanate from the performance of the US economy and the impact of tapering by the Federal Reserve.
Conservatism further affects Australia’s economy. This has been a major characteristic of the country’s economy in the last five years. From this observation, most people in the country save instead of spending. In other words, they are comfortable having their money in bank than allowing it to work elsewhere and generate more money. However, investors have recently shown their interest in property acquisition. Consumers also take time before settling on a product as they shop around. This has been triggered by a relative firm currency and the conservatism driven by the internet. The internet allows consumers to compare prices of various commodities before they make a buying decision. If this trend continues, Australia is likely to experience continuous thoughtful expenditure, coupled with low levels of debts. This will control inflation and ensure that interest rates take longer before they rise.
Like in most economies, interest rates play a major role in determining the economic performance of Australia. For example, the rate averaged at 2.75% in 2013, which was the lowest in the country’s history since 1959. Economists argue that it would be needless to raise interest rates if inflation remains under control.
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Retrieved from:
http://www.brw.com.au/p/business/big_issues_for_the_australian_economy_c5hmSe6Y2QErrr9ImtkzrJ
http://www.rba.gov.au/speeches/2012/sp-dg-070312.html