Current Economic Situation of Australia Free-Samples for Students

Question: Write a Business Report on Current Economic Situation of Australia. Answer: Election of Donald trump as the US president is one of the most significant global event. It has affected the world economy seriously. Before the US election different countries made various predictions related to the future policy impact on the health of the economy. Since US is the global leader, its policy decisions must have crucial impact on the growth of other economies. Those countries which have good trade relations with US will be seriously affected by different policies of the US president. Every country is dependent on other countries for various purposes. Australia has good relation with US in the field of trade. Different policies of US president will also seriously affect the Australian economy. The election of the US president has made large impact on the performance of the Dow Jones (Nunns et al., 2016). The performance of the Dow Jones is going to affect the world economy in a significant manner in the near future. The implication of the election of the Donald trump as the US president is not confined to the US economy but also for the rest of the world. The election of the Donald Trump as the Us President is not favourable for the Australian economy. Most of the Australian companies started thinking about different strategies to tackle the impact of policies those would be taken by the new US president (focus-economics, 2017). Majority of Australians supported the Democratic Party. The current economic situation of the Australian economy has been described below: The Australian economy is currently in a stable situation in comparison to other countries in the world. The economy is showing impressive growth in the current years. The Australian economy is getting benefits from the abundant resources present in the economy. This has made the dependence of the economy on other countries for natural resources. Other factors those have facilitated the economy of the Australia are the efficient management of the government the effective legal system. Australia is a suitable place for the foreign investment due to its economic position. Another important decision from the point of view of the government is reduction of the private investment in the economy. This has helped the healthy competition within the economy this is much needed by the government of any nation (Elliott, 2017). One of the most important points to be noticed in case of the Australia economy is that its fiscal position is also stable in comparison to the other developed in the w orld. Though the trend of the government debt is of upward rising, it is within the limit. Another added advantage of the Australian economy is the availability of the large number of skilled labours in the economy. Presence of large number of skilled labour in the economy is quite beneficial for the economy in order to improve the productivity of the economy this will help the economy in increasing the growth rate. This has helped the Australian economy to enjoy the expansion of the economy since long time. The global recession also could not harm the Australian economy in a significant manner. This country is enjoying the competitive advantage in the manufacturing sector as well as in the technology due to presence of large number of skilled labour force (Benjamin Isakhan, 2017). Since, Australia has the presence of large number of natural resources; it is getting the advantage of exporting various numbers of mining as well as different agricultural resources. There are various statistics available those will help in understanding the current economic situation of the Australian economy. The tax rate of the country set by the government is quite suitable for the growth of the economy. Due to the effective tax structure of the government, the country is earning sufficient amount of tax revenue. The government of the country has been in a position to earn large tax revenue to compensate the increasing debt of the government. It has also facilitated the government to spend a significant portion of the GDP on government spending this is nearly 37%. The fiscal position of the government is also at a stable position the budget deficit is around 2.8% of the overall GDP (Heritage.org, 2017). Another factor that has made large contribution to the Australian economy is the regulatory system of the country. Regulatory system of an economy plays an essential role in determining the performance of the economy in the world market. The Australian regul atory system is very transparent in nature. This has helped the country to encourage different entrepreneurs to invest in the domestic economy. The Reserve Bank of Australia has adopted different steps to manage the inflation of the economy as well as in enhancing the trading position of the country with trading partners of other countries. The inflation rate of the economy is 1.5% (Reserve Bank of Australia, 2017). On the other hand the trading relation of the country with other countries in the world is very strong. If the total value of export import of the country is calculated, it will be nearly 40 percent of the GDP. At the same time the government has emphasised on the privatisation of the economy in order to enhance the competitiveness of the economy. In case of the present monetary position of the country different policies of The Reserve Bank of Australia has made the situation stable. One of the most important monetary tools in Australia is the cash rate. It defines the bank rate of the Reserve Bank of Australia, i.e. the rate at which the central bank provides loans to other commercial banks. The current cash rate of the Australia is 1.5% (Davis, 2016). The cash rate of the country has remained unchanged since September of 2016. The cash rate of the economy is determined by the Reserve Bank on the basis of different factors these are the inflation rate of the economy, the position of the Australian dollar in comparison to currencies of other countries, the GDP of the country at the same time the confidence of the consumers. Before the election of the US president, different industries of the Australia as well as the Government of the country had planned different strategies to tackle the situation (Dixon, 2017). The election of Donald Trump as the US president is going to affect the world economy in general the Australian economy in particular. There is a free trade agreement between the US the Australia. This is known as The Australia United States Free Trade Agreement (AUSFTA). Since Donald Trump has emphasised on reducing the free trade with different countries, hence it may also affect the free trade agreement between the US the Australia. This will affect the Australian economy significantly (Trump, 2016). Another policy adopted by the US president is the policy regarding the VISA. The cancellation of the visa waiver program will lead to serious impact on Australian economy especially travellers of the country. On the basis of the above discussion the future forecast can be made on the Australian economy. It is projected that the economy will grow by 3% in the coming months. It is also projected that the resource sector of the Australian economy will decline in the near future at the same time it can be predicted that the non resource sector will grow due to the rise of consumption of household. Since there is a strong relationship between the unemployment inflation, the reduction of the unemployment rate in the next months will lead to make the inflationary position of the country stable. This will also help in reducing the inequality existing in the economy (Elliott, 2017). Towards the last quarter of the year 2017, it is expected that the RBA will tighten the monetary policy. It is expected that the government will adopt the fiscal consolidation policy. It can also be projected that the infrastructure sector of the economy will also grow. Hence return form this sector will be high. The government will also invest large amount in enhancing the skill of employees of the country. All these factors will help in reducing the inequality of the country. In coming months domestic as well as foreign investors will face various problems due to various factors. Since the US economy is recovering, it will lead to higher interest rate in comparison to previous years. The increase in the interest rate is not a good sign for the Australian economy. Increase in the interest rate will lower the foreign capital inflows in the country (Bank, 2011). It is also expected that the US economy will focus on reduction of tax under the presidency of Donald Trump in order to stimulating the US economy. At the same time the increase in the interest rate in US will cause a serious problem for those companies who had taken strategy to borrow in US dollar in order to take the advantage of the low interest rate. References Bank, R. (2011). Financial stability review. Benjamin Isakhan, Z. (2017).What it means for Australia with Donald Trump as president of the United States. [online] Business Insider Australia. Available at: https://www.businessinsider.com.au/what-it-would-mean-for-australia-if-donald-trump-became-president-of-the-united-states-2016-3 [Accessed 25 Apr. 2017]. Davis, S. J. (2016).An Index of Global Economic Policy Uncertainty(No. w22740). National Bureau of Economic Research. Dixon, D. (2017).The outlook for the Australian economy and investors in 2017. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/money/investing/the-outlook-for-the-australian-economy-and-investors-in-2017-20161208-gt739k.html [Accessed 27 Apr. 2017]. Elliott, L. (2017).How America's new president will affect the global economy. [online] the Guardian. Available at: https://www.theguardian.com/business/2016/nov/09/donald-trump-new-us-president-america-global-economy-china-mexico [Accessed 27 Apr. 2017]. fairwork.gov. (2017).fairwork.gov. [online] Available at: https://www.fairwork.gov.au/pay/penalty-rates-and-allowances [Accessed 20 Apr. 2017]. focus-economics. (2017).Economic Forecasts from the World's Leading Economists. [online] Available at: https://www.focus-economics.com/countries/australia [Accessed 27 Apr. 2017]. Heritage.org. (2017).Australia Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. [online] Available at: https://www.heritage.org/index/country/australia [Accessed 29 Apr. 2017]. Nunns, J., Burman, L., Page, B., Rohaly, J., Rosenberg, J. (2016). An analysis of Donald Trumps revised tax plan.Tax Policy Center, Urban Institute Brookings Institution. Reserve Bank of Australia. (2017).Australian Economy Snapshot | RBA. [online] Available at: https://www.rba.gov.au/snapshots/economy-snapshot/ [Accessed 28 Apr. 2017]. Trump, D. (2016). Transcript: Donald Trumps Foreign Policy Speech.The New York Times,27.