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Australian Economic Growth Assignment Help
In the present era, the competition of bringing advancements and developments had increases in each and every sector whether industrial, educational or social. As a whole these developments are made with the intention to contribute in the growth and development of the entire economy or country. The terms australian economic growth or economic developments acquire some of the specific differences with respect to the country. The present assessment is been carried out with the purpose to evaluate the economies of two countries and compare their growth and developments on certain parameters. It would help in identifying the factors which affect the GDP of the countries and their growth aspects. It would focus on different areas of the growth such as unemployment, inflation, fiscal and monetary policy, economic growth etc. In order to relate the facts and information about the economy, the economies of Australia and India would be compared stating their growth and development in past some years. There had been immense changes in the economic conditions in past some years which had made the people more civilised and knowledgeable to act upon any of the situation (Marcu.et.al, 2015). This particular work would help in clarifying the concepts and the facts about the economies and their related difficulties as well as success extensively. Australia is a free market democracy and had recorded remarkable economic advancements without facing any of the recession from almost past 25 years. On the other hand, India is been listed among the developing countries and had experienced fair growth with a rapid speed in last five years due to various aspects. Furthermore, the assessment would highlight various aspects related to both the countries and their economies effectively. It would elaborate the comparison between both the countries and their growth in past 5 years along with its effects on society.
Gross domestic product is basically a monetary measure of the market value of the goods and services being produced in a specific period like yearly or quarterly. The GDP is generally utilized for determining the economic presentation of the entire country and compare the same with the others. The Gross domestic price or GDP is mainly identified on three ways which should principally give similar results. The income approach, expenditure approach and the production approach are majorly used by the economies to determine their GDPs. However, the GDP growth rate facilitates in measuring as how rapidly the economy is been growing. The growth rate of GDP is been mainly driven by four basic aspects of GDP (Uddin.et.al, 2016). Personal consumption is been considered to be the most important component which involves retail sales. It has been identified that the business environment also drives the GDP growth to the great extent which involves the inventory and construction levels. The third drive of the GDP growth is the government spending as it is very much important start the economy after facing recession. Other components are the exports and imports where the exports drive a growth positively while increase in the imports lays an adverse impact on the growth particularly.
In context to the GDP growth of Australia, it has been found that the country had experienced a remarkable and the GDP is determined worth 1339.54 billion US dollars in the year 2015 and the GDP value of Australia depicts nearly about 2.16% of the world economy. In past five years, it has been observed that the country had experienced immense growth and progress. The GDP of Australia attained a growth of approximately 3.3% in the second quarter of in the current year increased from the 3.1% in March quarter contrasting to the expectation of the market of nearly about 3.4% growth (Meng.et.al, 2013). It has been identified that the year 2012, June quarter was been considered as the strongest expansions that brought annual growth of 2.9% for the financial year 2015-16 and moving ahead without any of the technical recession. However, the growth rate of a year is been recorded by the Australian bureau particularly.
On the contrary to this, the Indian GDP is marked worth nearly about 2073.54 billion US dollars in the year 2015. The value of GDP had indicated 3.34% of the world’s economy. The GDP of 2015 is been considered to be the highest of the amounts. It is been reported by the World Bank Group. The GDP of India in the year 2014 was nearly about 2048.52 billion which then increased and reached to the highest. It has been estimated that the Indian economy would have a growth of top 8.5% in the 2015-2016 financial year. As per Mukherjee.et.al, (2014) there are various factors which affects the GDP of an economy along with its growth. Human resources, capital formation, social and political factors, technological development, etc. are some of the common factors which affects the Indian economy to the great extent. Moreover, the Australian economy is been affected by the decline in the commodity prices, increase in the unemployment, investments, growth of sectors outside the resources sector, etc.
Gulati.et.al, (2014) indicates unemployment as the people who are not working and looking for the work. The unemployment rate mainly depicts the percentage of the total work force which is unemployed and is looking for the work or searching for employment. It has been identified that Australia had experienced a great decline in the recent times. The Australian Bureau of statistics stated that the unemployment rate had fallen to 5.72% in July and had continued the descending trend from the initiation of the year 2015. This rate is been considered to be the lowest rate from past 20 months. There are various types of unemployment which are been seen in the country in different regions such as: frictional, structural, cyclical and seasonal unemployment. The rates of unemployment affect the economic condition of Australia to the great extent and leads to the decline as well. It has been observed that the long term unemployment leads to the economic and social issues in the country extensively. It represents the low income of family which means that the consumption of money of people is lower which affects the economic condition of Australia directly (Morris and Wilson, 2014). However, the less consumption rate of people represents the people having low purchasing power which means reduction in the demands of goods which thus impact on the growth of the economy of the country. The lower demands or impact on the governmental tax collection would lead to the insufficient funds for the social welfare and the infrastructural aspects.
In addition to this, the Australian government had levied some specific policies for the unemployment in order to reduce its impacts over the economy. According to Argy and Nevile, (2016) each and every country develops specific policies with the purpose to maintain the employment balance and decrease the unemployment rate for the sake of social and economic conditions. It has been recently identified that the Australian government had initiated to manage the unemployment rate and maintain the economic growth. However, every state and territory like Tasmania, SA, NSW, Qld and WA had implied various policies with respect to the unemployment. These territories or regions had made use of the low minimum wages policy to augment the unemployment. Many of them are facilitating the unemployed people with various benefits to motivate them to obtain employment and make better efforts towards it. Simultaneously, a new start allowance of $501.00 per fortnight was offered to a single people seeking to motivate the unemployed of gaining employment. The policies like apprenticeship schemes, work place training, benefits and tax reforms, government subsidies, etc. have been initiated so that to reduce the unemployment and contribute in the enhancement of the economy.
King, (2016) defines inflation as the percentage change in the Wholesale price index value on the basis of year on years. It helps in measuring the changes in the prices of goods and services in a particular year. It is been considered to be an increase in the prices and the decline in the purchasing value of money. Inflation takes place when the money supply goes beyond the available goods and services. It has been seen that inflation is a situation where the level of prices is increased but is not related to the high prices. It is been considered to be a major economic implications issues which adversely impacts the levels of economic growth along with the income inequalities and international competitiveness. Acquiring a sustainable low inflation rate is the major objective of the economies due to the benefits of the lower inflation in the long term for the economies. In Australia, the most common and widely used inflation measure is the percentage change in the consumer price index (CPI). CPI is mainly referred to the summary of the fluctuation in the prices of the goods and services and weighted against the important Australian household. On the other hand the Indian economy measures the inflation rate keeping the wholesale price index as the base. There are four most critical inflation types being classified based on their speeds and which influences the economies to the great extent such as: creeping, walking, galloping and hyperinflation (Nevile, 2015). There are various causes of inflation which could influence the economic condition of the countries. Demand-pull, cost push, imported inflation and inflationary expectation are generally referred to the major causes of inflation by many of the economists. It has been identified recently that the consumer prices in Australia had been increased more than the expected rates as the higher costs of fuel and food led towards the inflation.
Inflation plays a significant role in affective the economies as it influences the distribution of wealth and income. The demand pull inflation takes place when the aggregate demand goes beyond the productive capacity in the market structure economy and the prices are increased. In order to maintain the inflation rates, the government of Australia had developed certain policies which could help in managing the inflation sustain for the longer period of time. Some of the most common policies being made against the inflation are monetary policies, fiscal policies, exchange rate policy, wage control, etc. However, the Australian government makes use of the monetary policy with the purpose to influence the interest rates which would affect the levels of inflation. The monetary policy in form of affecting the interest rates by the reserve bank is monitored by the monetary supply of Australia and achieves specific goals like external stability and sustainable economic growth.
On the contrary, the inflation in India is been caused due to deficit financing, increase in the money supply, rise in the administered prices, enhancement in the government expenditures, inappropriate agricultural and industrial growth, increase in the taxes, rise in the import prices, etc. However, the Indian economy also follows the monetary policy to reach to sustainable inflation rate and maintain the economic growth as well (White, 2014). It has been identified that India had adopted an inflation target of approximately 4% for the next five years keeping the monetary policy framework into consideration as a focus on the macroeconomic stability in order to boost the economic growth and keeping check on the prices as well. Some of the speculations had been found regarding the higher inflation targets as being arranged to build a room for reducing the interest rates and boost growth effectively. With the introduction of RBI act as modified by the Finance Act, 2016 had provided with the prime objective of monetary policy i.e. to maintain the stability in prices keeping the growth objective into the minds and meet the confronts of an increasingly composite economy (Dholakia, 2015).
Galí, (2015) defines monetary policy as the macroeconomic policy being laid down by the central bank. It basically comprise of the action of currency board, central bank or any other regulatory body which identifies the size and the growth rate of the money supply and affects the interest rates to the great extent. The monetary policy is been mainly maintained with the help of actions like buying or selling the government bonds, transforming the interest rates, varying the money bank amounts, etc. are needed to keep the bank reserves. The central bank of Australia is leading the monetary policy since the financial deregulation in the year 1980s. The amounts of money rotating in the economy is been increased or decreased with the help of making adjustments in the cash rates i.e. the rate which is provided to the commercial banks. The reserve bank of Australia makes use of various numbers of tools to shape the monetary policy. The open market operation lays a direct impact on the money supply by making a purchase of short term government bonds or selling them to the others. In addition to this, Australia has been considered to be the head of utilizing the fiscal policy so that to overcome the macroeconomic influences over the Global financial crisis.
Gregory and Smith, (2016) stated that the Reserve bank of Australia is liable to formulate and implement the monetary policy in the economy and maintain the growth extensively. The decision of monetary policy mainly includes setting up the interest rate on the immediate loans in the money market. In addition to this, the interest rates of the Australian economy are influenced by this specific interest rate to different extents with the purpose to affect the behaviors of lenders and borrowers in the financial market with the help of monetary policies. It has been even found that the Australian government debt is smaller by means of international standards and could afford the use of fiscal policy effectively. It has been argued that Australia was been included in one of the few countries in which the interest rates went high within the years 2009 and 2013. The Reserve bank cut rates for the first time in past 18 months by decreasing the official cost of borrowing with the purpose to record the rates of 2.25% specifically. It has been even observed that if the consumers are well acquainted with the information of long run issues of the government budgets shortfall then the fiscal policy of the country become weak.
In context to the economic growth, it has been seen that the economic growth of Australia had crossed the expectations growing up to 0.6% in the last quarter of the year 2015. It has been seen that the country had experienced drastic growth in past some years but had also gone through some extraordinary issues which were never seen in the economy earlier. It has been identified that Australia is facing immense rate of unemployment which is weakening the economy and the growth as well. It has been recorded that the GDP of Australia had attained a growth of nearly about 3.3% in the second quarter of in the current year which had increased from the 3.1% in March quarter contrasting to the expectation of the market of nearly about 3.4% growth (Thorpe and Leitão, 2014). It has been found that the lower demands or impact on the governmental tax collection would lead to the insufficient funds for the social welfare and the infrastructural aspects. Even it has been observed that the long term unemployment leads to the economic and social issues in the country extensively. It represents the low income of family which means that the consumption of money of people is lower which affects the economic condition of Australia directly. Due to the increasing unemployment, the income and the tax base is also reduced which would influence the society to the large extent. It is because; the flow of income in the Australian economy reduces which would decrease the spending of the government over the social welfare and would thus affect the same.
In comparison to the Indian economy, it has been seen that the country is experiencing accelerated economic growth in-spite of the decline in exports. It is been anticipated to immerse slightly by the financial year 2016 because of the stressed corporate balance sheets, slowdown in the public investments and downfall in the exports. The economy is forecasting to strengthen the bank and the corporate finances in order to allow the reinforcement in the investment practices. It has been estimated that the Indian economy would have a growth of top 8.5% in the 2015-2016 financial year (Jain, 2016). Concerning for the future, it is been estimated that the GDP annual growth rate of India to reach at approximately 7.00% in next 12 months period. In context to long term, the Indian GDP is predicted to reach around 5.70% till the year 2020. Indian economy is also seen to grow with a rapid speed due to the emergence of new trends and increased investments in the country.
With the above assessment it is been concluded that GDP is utilized for determining the economic presentation of the entire country and compare the same with the others. It has been identified that there are various factors which affects the GDP of an economy along with its growth. Human resources, capital formation, social and political factors, technological development, etc. are some of the common factors which affects the Indian economy to the great extent. Moreover, the Australian economy is been affected by the decline in the commodity prices, increase in the unemployment, investments, growth of sectors outside the resources sector, etc. Even it has been revealed Australia had experienced a great decline in the recent times. Each and every country develops specific policies with the purpose to maintain the employment balance and decrease the unemployment rate for the sake of social and economic conditions. The assessment had also identified that the Australian government makes use of the monetary policy with the purpose to influence the interest rates which would affect the levels of inflation. Furthermore, it has been even recognized that speculations had been found regarding the higher inflation targets as being arranged to build a room for reducing the interest rates and boost growth effectively. Even it has been observed that the long term unemployment leads to the economic and social management issues in the country extensively.
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