Gross domestic product (GDP) is one of the major indicators that are used to measure the health of the economy of the country. It reflects that total value of all the goods and services that are produced in a specific period of time. There are generally two types of GDP one is nominal GDP and other is real GDP. The nominal GDP define the country’s economic output without any adjustment related to the inflation. On the other hand, the real GDP is equal to the economic output adjusted for the effects of the inflation (Kramer, 2018). Most of the economist takes the help of the GDP to look for the economy of the country. The economy of the country is depended on the GDP of the country. Economy of the nation is directly concern with the production, distribution and the consumption of the goods and services that takes place in the nation. The paper talks about the GDP and the economic growth in Australia in last 5 years. Australia is known as the nation having the mixed economies (Nordea, 2018). The rise in the economic takes place when there is increase in the inflation-adjusted market value of the goods and services that is produced by an economy over time.
GDP of Australia reflects the total market value of the final goods and services that have been manufactured within a country in an allowed period of time which is usually a year. The figures of the GDP permit in understanding the economy of Australia in a very clear manner. Real GDP is also considered as one of the important economic indicators that measure the price changes into the account (Focus Economics, 2018). Therefore, the overall analysis reflects that GDP of the country reflects the economic growth. The GDP growth rate in Australia us steady foothold which means it is a somewhat shaky post-recession world.
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(Source: Statista, 2018)
The above image reflects the GDP of Australia from the year 2012 to 2022. In the year 2012, the country was having the highest GDP that is 3.9% then in the last few years. This image also reflects the prediction related to the GDP of the country in the coming few years till the year 2022. This expectation reflects that the economic growth of Australia will rise in the coming years. Considering the GDP of the year 2018, it is expected that it will rise from the year 2017 because in 2017 the GDP of Australia was 2.27% which is expected to rise to 2.96% (Statista, 2018). The GDP of Australia is important to evaluate the performance of Australia's economy. According to the Bureau of Statistics, the GDP data get to publish on a quarterly and the annual basis.
The economy of Australia advanced 0.4% in the December quarter of the year 2017, less than the market consensus of a 0.6% expansion along with an upwardly update 0.7% growth in the previous quarter (Scutt, 2018).
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(Source: Trading economics, 2018)
The above image reflects that it is having weakest growth rate since a contraction in the September quarter 2016 as a positive influence majorly came from the final consumption expenditure while non-dwelling construction and net trade had a downward effect. The image reflects that GDP growth rate of Australia for the year 2016 and 2017. This image shows that the growth rate is low than the previous year in Australia.
The GDP of the country has the direct relationship with the economic growth of the country. The Australian economic grew approx. 0.6% last quarter and 2.8% over the past year (Janda, 2017). This reflects that the economy of the country is improving but it is less than expectations of the economist. In addition, the Reserve bank of Australia talks about the economic growth of the nation will accelerate in the year 2018 by 3% (Trading economics, 2018). The Australian trade data in the present day reflects that the data is set to add significantly to Q1 GDP when it released in a month. It is fact that the RBA of the company predicts the economic growth of the country for the future years and considering the same they make strategies and plans for the national development and improvement (Reserve Bank of Australia, 2018). After a disappointing 2.3% rise in the year 2017, it is expected that the economic growth will accelerate in the year 2018.
RBA Governor Philip Lowe commented that the monetary policy statement in the last week of the 2018 May in which he shared the views which state that the central forecast for the Australian economy remains for the growth to pick up to average a bit above 3% in the year 2018 and 2019. The price effect in the economy of the country is taken into the account which shows that the real goods and services imports might have reduced by 0.5% in the Q1 as a whole and the real exports have risen by the 3.0%. The below chart reflects the graphical presentation of the Real goods and services import and export (Scutt, 2018).
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(Source: Scutt, 2018)
This data is essential to be considered because the growth in the economy of the country is related to the data of the real goods and services import and exports. Trade in the goods and services are defined as the fluctuations in the ownership of the material resources and the services of the economy and another. The import of the goods and services leads to the impact on the working of the economy. The rise in the imports of the goods and services leads to the trade deficit in the country along with this if the imports of the company are less than the exports of the company that leads to the trade surplus (Amadeo, 2017).
The economy of Australia has experienced 26 years of the uninterrupted economic growth and the country hold the highest growth rates of the developed world. Australia is known for the world’s 13th largest economy. The IMF has predicted that the Australia growth of the GDP to 2.2% in the year 2017. The decrease took place because of the partially bad weather which slowed housing investments and mining exports as it temporarily disrupted coal transportation. The economy of the country is totally depended upon the business activities that are taking place in the country such as mining, agriculture, and others. The economy of the county is also driven by the government spending because the consumer sectors struggle hard for the low wages growth (Miller, Kim and Holmes, 2015). The economy of Australia is effective because the country has the benefit from the large-scale exports of agriculture products and a vigorous financial sector. This reflects that the exports of the country have contributed to the economy.
The Australian treasury foresees a real growth in the GDP of the county by 3% as it assumes that the consumption of the household to rebound the following a constant support in the nation’s labor market. In the year 2017, Australia faced the inflation rate of approximately 1.9% while the wages of the labor increased by 21% which clearly reflect that the purchasing power of the citizen increased (Nordea, 2018). The economic condition of the country is improved due to which the Australian net debt is still low by the international standards. In the year 2016-17, the company faced the net debt and in the same year, the company has 18.9% of the GDP. The government of Australia has predicted the GDP of the country at 19.2% in the year 2017-2018 which is expected to decline slowly (Nordea, 2018). Though, the IMF has currently warned the Australia nation because of its high level of the household debts. This situation takes place when GDP has risen to 100% which is quite in the case when the ratio is just around 63%.
The unemployment rate of the country is also related to the economy of the country. The low unemployment rate in the country reflects that more and more people in the country are employees which means they are directly contributing to the development of the nation and the growth of the economy (Gregory and Smith, 2016). On the other hand, if the unemployment is high in the country which means that the people of the country are not contributing to improve the operations of the country. The unemployment rate in Australia was 5.6% for the year 2017 which is very low and after considering the view of the Australian Bureau of Statistics approx. 725 people of Australia are presently unemployed and the rate is falling. Along with this, ABS has reported that the country has approx. more than 1.1 million underemployed people in the nation that reflects the major global trend that is weighing on the growth in the wages. This is the major factor that is affecting the growth of the economy of the country (Argy and Nevile, 2016).
In addition, Australia can also face the aging population problem because the people present in the country are sooner going to face their old age (Sutcliffe and Dhakal, 2018). Moreover, the nation is also dealing with the climate issues such as the Great Coral Reef lost approx. 20% of its coral because of a catastrophic bleaching situation. The country is also dealing with the pollution factors which include the greenhouse gas emissions which made the country to take the steps for developing its nuclear energy sector so that they can bring down the emissions of the greenhouse gas. The below-given image reflects some of the important factors that play a vital role in the economic growth of the country.
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(Source: Nordea, 2018)
There are some major sectors that contribute to the development of the economy of the country. The service sector occupies a leading position in the economy of the Australia that contributes 70.3% to the GDP and provides the employment to the 70% of the workforce. The biggest growth in this sector has been registered with the increase in the business and the financial services of the company.
Along with this sector, the agriculture sector within the country also provides the employment to the 26% of the workforce and contributes to the 3.6% of the GDP (Nordea, 2018). The country is known for the vast agricultural activities along with this it is also an exporter of the wool, meat, wheat, and cotton. This reflects that the agricultural and the mining are one of the most essential sectors for the exports. Australia is known as the largest producer of the raw material of energy across the world. Moreover, the country has the world largest reserves of the resources which mean it holds 40% of the worlds confirmed reserves.
In addition, the country is also known for the exports of the finished goods. The industrialization that took place in Australia was very recent which is a fact which shows that the small scale of its manufacturing sector. The industrial sector in Australia provides the employment to more than one-fifth of the personnel. Therefore, this employment contributes in the GDP of the company and reaches to the 26.1% (Nordea, 2018). The manufacturing industry is formed around the food industry, machinery, metal procession and the different types of petrochemical and chemical industries.
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This reflects that the employment and unemployment of the nation’s matters a lot in the economic growth. The GDP and the economic growth are depended on the employment and the employment opportunities of the country which arises due to the advancement and the growth of the sectors of the business.
The overall analysis reflects that the GDP and the economic growth of Australia are interrelated concepts. The GDP is related to the economic growth of the company as the rise in the GDP of the country results in the rise in the economic growth. Though, this is the fact that the company has found downfall in the GDP and upward which means that there is fluctuation in the GDP of the country. Moreover, for the year 2018, it is expected that the GDP of Australia will rise which brings the economic growth. The government of Australia should bring new opportunities in the nation which helps them in generating the employment. The high employment rate will lead to the rise in the GDP of the country and ultimately brings the economic growth. The group found that the economic growth will increase because more and more people will get the jobs which mean more earning and the supply of money which leads to GDP of the country and the contribution in economic growth. The government can get the taxes on the income that has been generated and can make use of income for the welfare of the society.
References
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Argy, V.E. and Nevile, J. eds. (2016) Inflation and Unemployment: Theory, Experience and Policy Making. New York: Routledge.
Focus Economics (2018) GDP in Australia [Online]. Available from: https://www.focus-economics.com/country-indicator/australia/gdp [Accessed on 26th May 2018]
Gregory, R.G. and Smith, R.E. (2016) 15 Unemployment, Inflation and Job Creation Policies in Australia. Inflation and Unemployment: Theory, Experience and Policy Making, p.325.
Janda, M. (2017) GDP: Australia's economic growth improves but weak consumers disappoint the optimists [Online]. Available from: https://www.abc.net.au/news/2017-12-06/economic-growth-gdp-figures-september-quarter/9231122 [Accessed on 26th May 2018]
Kramer, L. (2018) What is GDP and why is it so important to economists and investors? [Online]. Available from: https://www.investopedia.com/ask/answers/what-is-gdp-why-its-important-to-economists-investors/ [Accessed on 26th May 2018]
Miller, T., Kim, A.B. and Holmes, K.R. (2015) 2015 Index of economic Freedom. Washington DC: The Heritage Foundation.
Nordea (2018) The economic context of Australia [Online]. Available from: https://www.nordeatrade.com/en/explore-new-market/australia/economical-context [Accessed on 26th May 2018]
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Scutt, D. (2018) Here's what economists are saying about Australia's GDP report [Online]. Available from: https://www.businessinsider.com.au/australia-economic-growth-q4-gdp-economists-rba-interest-rate-outlook-2018-3 [Accessed on 26th May 2018]
Scutt, D. (2018) The early signs are looking good for Australian GDP [Online]. Available frosm: https://www.businessinsider.com.au/australia-economic-growth-q1-gdp-trade-2018-2018-5 [Accessed on 26th May 2018]
Statista (2018) Australia: Real gross domestic product (GDP) growth rate from 2012 to 2022* (compared to the previous year) [Online]. Available from: https://www.statista.com/statistics/263602/gross-domestic-product-gdp-growth-rate-in-australia/ [Accessed on 26th May 2018]
Sutcliffe, J.E. and Dhakal, S.P. (2018) Youth unemployment amidst aged care workers shortages in Australia: Why care about the millennials?. Equality, Diversity and Inclusion: An International Journal, 37(2), pp.182-198.
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