Introduction
Australia is one of the few countries of the world that have been enjoying a high status on the economical front of the world when it comes to the growth of the economy and its statistics. There is no doubt in stating that Australia is noteworthy in a number of areas in which the country has made significant progress. As of the figures presented in the year 2000 by the Australian Bureau of Statistics, it is noted that in 1999 the Australian economy grew by 4.3 per cent and as such growing at the rate of more than 4 per cent for the past eleven quarters in a row.
That very while Peter Costello, Australian Federal Treasurer, stated that Australia’s future growth is estimated to grow around the same pace; this is something that was not possible in the past. This growth has added millions of billions of Australian dollars to the surplus. There are a number of areas that contribute to this impressive rate of growth for the Australian economy. Major of these areas can be seen as that the exports of the country are on the rise; strong consumer spending also proved to be highly contributory to the boost of the country’s economy.
The Federal Treasurer also gave way to a very important notion that in the past, the Australian economy was regarded as the one the depended on commodities; so it was the “old economy”; according to him, today things are different. Australia is now the “new economy” that finds its way of development in the new technology industry. Now, this is absolutely an outmoded approach to say that Australia is a quarry and farm. This is because of the fact that the country’s today Australia’s communications sector is as broad as its mining industry and it is now larger than agriculture. The finance sector is even larger than these (Xinhua English Newswire, 2000).
Looking at Inflation
Looking at the present condition of the Australian economy, though it is a right observation to make that the country’s economy is booting up, however, inflation is one area that is giving concerns to the regulatory authorities of the country. According to the very recent report by the Economist, USA (2008), it is even putting the concerned officials in a state of trouble. As per the statistics issued by the Reserve Bank of Australia, it raised the benchmark loaning pace (that is by a point of a quarter) to 7.25% which was observed to be its 12th increase in a row.
There are other western countries that are faced with the issue of inflation; however, the source says that the Australian approach to it is hawkish. In the rest of the world, the bills are rising especially in the areas of food and energy consumption that are driving up imported inflation. However, in Australia, the pressures of the price are at the utmost level grown in the house with the boom in the economy. Statistics suggest that as of March 5th the GDP of the country expanded by 3.9 per cent; meanwhile, inflation (non-tradable) was also recorded to be 4.1 per cent.
Tradable inflation, which covers those goods that are traded worldwide, was recorded to be 1.4 per cent. There are acute capacity constraints that are causing the Australian domestic economy to suffer. The rate of unemployment fell to 4.1 per cent in January which was reported to be a 34-year low rate: “That is well beneath the level that can be sustained without causing inflation” (Economist, USA; 2008). Other factors are a boom in commodities that has caused the miners to draw to the outback in herds. The demand for more hotel rooms is causing the country towns to creak. Moreover, it is noted that locals are being whisked away to far lying villages and immigration taking place at a large-scale rate is also putting immense pressure on the stock of housing.
To make matters worse for those who want to fight the issue of inflation, real incomes are getting on the rising curve. Unlike a huge number of wage-earners in a number of different countries of the world, the Australians are expected to grow richer from the boom taking place in the commodities. Other matters like rising farming, etc. will contribute to this increase. However, it is also noted in the same source that all these matters apart, Australia is one country that can be regarded as one of the most lucrative bond markets of the world (Economist, USA; 2008).
Issues for Economy
However, looking at the bigger picture from different angles tells us a different story. There are some areas in which the Australian economy has to wrestle to maintain its growth and development. Reviewing the literature on the same issue gives us some important considerations to analyze. According to Hyeon-seung (2002), empirical analysis of the situation reveals that the lingering issues of inflation and joblessness are still so much alive in the Australian economy.
This issue combined into one lives more on the side of business cycle frequencies. There are findings of the research that suggest a strong correlation between the two. In this study, a number of data sources were gathered such as GDP, business cycle periodicities, and annualized rate of inflation. The author employed a number of sternly accuracy-based research models to gauge that output cost was associated with lowering the inflation rate of Australia.
The author reveals that it was possible for inflation to be put down to a controllable degree but the approach that was needed was gradual monitoring of a number of variables such as cost advantage. However, the writer shows that literature and Australian officials are very much concerned about the issue of inflation and are putting their best consideration to this area up to the present.
Business Cycle
Reviewing statistics for the Australian business cycle, it can be noticed that in April 2008, the index eventually increased. It is, however, important to note that 3 months in a row before April, the index was on the downward curve. The major contributor to this decline is taken to be the building approval in the business cycle of the Australian economy; on the other hand, the positive contributors toward the progression of the index are taken to be as goods exports, real money supply, and share prices.
Now very while the statistics reveal that “The six-month growth rate in the leading index has declined sharply to 0.1 per cent (a 0.2 per cent annual rate) during the six-month span through April, down from 2.8 per cent (a 5.7 per cent annual rate) in the six-month period from June to December 2007”. In addition to this, the business cycle of the country is seen to be just greater than what happened in the last six months. If we look closely at this issue it might be hoped that this situation will ultimately move toward betterment and the country’s business cycle will reveal positive returns for the country and its people (PR Newswire, June 26, 2008).
Employment in the Country
Employment conditions in Australia are examined to in favour of the country in recent times, that is to say, the condition is improving as compared to the previous growth ever since 1994. This growth has positively influenced the current numbers of jobless figures: “down from a peak of 11-12 per cent in 1993-94, today’s official figures hover somewhere between 6 and 7 per cent”. However, instead of what the official figures state, the condition is not like this. Secure jobs in the country are declining.
Full-time jobs and maintained jobs find the same challenge on the part of the citizens. “For example, the ABS reported in 2000 that the proportion of all male employees with full-time jobs decreased by 13 per cent between 1988-98, while the number of women with similar work arrangements declined by 10 per cent”. If we look more closely, there are other issues that reveal a different picture from what the official media and reports account for. Thus it is crucial to look at the actual causes that are giving way to increasing joblessness in the country so that better measures can be taken (Jason, 2002).
Future Growth of Australian Economy
Looking at a number of sources reveals that there are countless references that can be used for the discussion about the future growth of the Australian economy. However, the present paper has attempted to incorporate only those sources that bring the latest references about this issue as well as are closer to the date of the paper writing so that a more solid approach can be obtained. According to the present Federal Treasurer of Australia, Wayne Swan, there is huge optimism in the connection of the future of the Australian economy. This statement was backed up at the time when a decrease in the rate of unemployment and “a pat on the back from the International Monetary Fund (IMF)” were well in place.
IMF actually has given approval to a great many Rudd policies by the government although it warned the country of the rising risks of inflation. Mr Swan was of the opinion that with the IMF warning and support, the country is optimistic to rise steadily on the international horizon given all the challenges present not only in the Australian terrain but to the entire world. The budget, according to him, was designed to create maximum pressure possible so that inflation can be fought out along with pressure on interest rates (AAP General, June 10, 2008).
Michael Blythe, the Commonwealth Bank chief economist, clearly stated that although in the last half of the year 2005 the economy did step down a few steps, the rising figures of the exports bills expanding and more and more investment coming into the business sector tell us that the Australian economy should for the sure rise in the near as well as far laying future. Moreover, for the December quarter of the year 2005, the release by the national accounts also came to show solid growth in the overall economy.
It stated that the major reason for this remarkable growth was actually the strong investment that was coming in the business sector. It was possible that some of the forecasts do not match the real results of the future; it is more solid to state that the growth of the economy will return positive results for the country (AO Online, 2006).
However, there are critical areas that need to be attentively addressed by the Austrian government before any solid claim can be laid in the folder. For instance, the growing interest rate is one critical area. According to the AAP General News (May 5, 2006), $35 per month was paid by the average citizen of Australia in a mortgage payment.
In addition to this, the source mentions that the economy is working at two levels: one that is well in the view, which is the boom of the country; however, the other is that which is not in view, for instance, the manufacturing “firm is trying to compete” in opposition to each other by importing cheap goods; the ordinary owners of the home are dealing with mortgage and such things as higher prices paid by motorists at the browser is no more a surprise (APP General News, May 5, 2006).
Canadian Economy
It is surprising to note that in comparison, there are quite a few similarities between Canadian and Australian economies. For instance, low paying jobs for part-timers are increasing in both countries. The inflation rate is also increasing in Canada like Australia. Moreover, the government figures post some other information about these statistics than is actual reality. Another major issue similar to both economies is facing is job conditions are changing in both and unemployment is increasing. With unemployment, another problem is the increase in the number of discouraged people who are found contending with a shortage of work opportunities.
It is estimated that in the next 20 to 30 years both countries will face major challenges in unemployment. In addition to these problems, other emerging challenges for both economies are very much similar. The challenges for homelessness, stay-at-home people, crime, rates, increasing welfare outlays, poverty, and underemployment are the major issues that both the economies are estimated to face in the coming time which is an alarming situation not only for both the economies but also for the entire world. As such it is important to strike through the issues to seek better solutions before it is too late (Jason, 2002).
Conclusion
Looking at the present situation of the Australian economy from a number of perspectives, it is noteworthy that the country’s economy is on the steady boost due to two major factors: (i) its development in the sector of technology and so much investment that is coming in the business sector. However, issues like inflation, unemployment, high interest rate, the juggling of local businessmen at the cost of quality are issues that should be taken seriously. It could be stated that with the research done in this paper, the next 6 months for the Australian economy are even more fruitful and the country will continue to rise.
References
AAP General (2008). FED: Swan optimistic about Australian economy. AAP General News (Australia). Web.
AAP General News (2006) FED: something amiss in the Australian economy. AAP General News. Web.
Australian economy grew 2.7 percent in 4Q. AP Online. Web.
Economist, USA (2008). Hawks in the outback; Australia’s economy. The Economist, USA. Web.
Hyeon-seung, H. (2002) Estimating asymmetric output cost of lowering inflation for Australia. Southern Economic Journal. Web.
Jason, L. (2002). Sustained and growing underemployment in Australia and Canada: the truth behind government employment figures. Journal of Australian Studies. Web.
PR Newswire, (2008). The Conference Board(R) Australia Business Cycle Indicators(SM). PR Newswire. Web.
Xinhua English Newswire (2000). News analysis: Australian economy posts growth unrivaled in 30 years. Web.