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In August 2016, Glenn Stevens, the then Governor of the Reserve Bank of Australia, presented an overview of the world and Australian economies (see). For Assignment 2 you are required to firstly read this speech and to then prepare a report on the current (i.e. September 2017) state of the Australian economy and compare its performance with state of the economy in August 2016. You could use the RBA report to guide your thinking on how to prepare your report. In completing your report it will be necessary to examine the latest figures for the following four economic indicators – economic growth (GDP), unemployment, inflation and trade (including the terms of trade, the current account, net foreign debt and the value of the Australian dollar). In examining the performance of the Australian economy it will be useful to outline any expected target values that exist for the economic indicators. Finally, given your analysis, you are asked to highlight three major issues facing the Australian economy over the next 12 months and why you perceive these as of concern.
During his tenure as Governor in the reserve bank of Australia, Glenn Stevens has shown some serious reservations on the “extent of reliance on the monetary policy around the world” He has shown his main concern on the lowering down of the short term interest rate in the country. Former Governor argued that the low-interest rate lured households into spending more. High spending and lower saving could be a hostile situation for the economy in the coming years. The current forecast of the main economic indicators, namely GDP, inflation, unemployment, trade, has also been predicted stagnant over the years. Australian economic growth is very much influenced by the growth of the trading partner countries. The standard Indicator for measuring an economy has been taken as GDP; meanwhile, inflation gives us an idea of the real value of investment done. On a general rule, when the actual output of the economy is below its potential, then inflation is low as unused plants and excess labour is available. The above economic principle has been used for the Australian economy, and the result has been discussed in the report.
We have also used tables and graphs from World Bank data sources to present the GDP, Inflation, unemployment and trade structure of Australia in the past year. A conclusion has been made upon these data, tables and reports and literature review of various authors on the economic condition of Australia in light of four economic indicators, namely GDP, unemployment, Trade and Inflation. A Proper reference and citation of work have been given in the report at the end. The conclusion reached in the report is of argumentative style, taking into consideration World Bank and IMF advice and report published by government authority. The past year’s data of GDP and Inflation has been presented in graphs and tabular form.
To summarise, the Australian economy’s performance GDP growth has been estimated to be lower for the next quarter than compared to the past three-quarters. Non- mining businesses will show a slowdown over the year 2017 despite the support provided by the low-interest rate. Inflation will remain as expected, and there is very little room for it to be different. Productivity will also remain slow over-earning in the year 2017 due to higher commodity prices.
The economic condition and its sustainability depend upon the stable growth rate of the Economy (Ramaday, 2011). The GDP, inflation, unemployment, trade balance are the main factors on which the economy of a country is being analyzed. The four factors should have shown a kind of correlation with each other for sustainable development. Inflation also has a direct effect on the living standards and ultimately policymaking for an economy. Trade mainly depends upon factors as the balance of payment, current account, net foreign debt, and exchange rate. Unemployment is one of the economic crises that affect economic systems in different ways. Lack of jobs in a community brings about many harmful implications that affect both individuals and governments. Generally, the lack of income of jobs destroys the developmental plans of governments. Governments lose the incomes they used to have because of a lack of jobs; in addition, they are required to pay for unemployed people. On the other hand, the GDP of the country harmfully got affected because of the lack of production. That indicates signals of a recession in the country, which in turn discharge investors away. From the above four factors and their impact on the economy have been further analyzed in the context of Australia for the year 2017.