Australia's economy_final.docx - I Introduction Australian economy is considered to be one of the largest mixed-market economies in the world with an

Australia's economy_final.docx - I Introduction Australian...

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I. Introduction Australian economy is considered to be one of the largest mixed-market economies in the world with an average annual growth rate of 3.5% over 57 years (1960-2017) (Trading economics, 2017). This market is highly service oriented, with more than 70% of its GDP coming from the financial, educational and tourism sectors (PwC, 2017). Although being evaluated as one of the most impressive growth industries, Australia has become well known for having a high unbalanced net trading: The country is importing a lot of resources from other economies to meet domestic consumption. Australia is a major exporter of natural resources, energy and food to Japan, the United States, China, South Korea, New Zealand, the United Kingdom and ASEAN countries (CIA, 2015) . Besides, it is also the fertile land which has the little control over imported goods and services. With rich and diverse natural resources, including coal, iron, copper, gold, gas, uranium and renewable energy, the state also have attracted a lot off large investments from abroad. The process of opening up the economy helps Australia to increase labor productivity, stimulate economic development and help the economy become more active and flexible. Indeed, Australia plays an active role in the World Trade Organization, APEC, G20 and other economic and trade forums. II. Production output performance a. Real GDP Economists divide GDP into two categories: nominal GDP and real GDP. Nominal GDP is the gross domestic product of the final value of goods and services measured at the time of calculation, while real GDP is adjusted to correct for deviations of the currency due to inflation/deflation. This is used to make a more accurate estimation of the actual quantity of goods and services. (Mankiw, 2008)
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During the period from 2008 – 2017, Australia’s real GDP has increased significantly, indicating that Australia's living standards has been more and more improving. Even when the world had to face with many crises as well as shortcomings in recent decade, the country still promises a stable development economy. Particularly, real GDP of Australia has risen to nearly $ 100 billion after just 10 years and it is ranked 13th over the world in 2017 (WorldBank, 2017). In which, while trading deficit is growing, 3 remain components have a tendency to go up. b. GDP annual growth rate GDP growth rate is essential indicator in order to assess an economic health. It is conducted by comparing one quarter/year of the country's GDP to the previous ones and usually changes due to the business cycle of expansion, peaks, contraction and trough periods. As the economy is expanding, GDP growth is positive. It means that the businesses, jobs and personal income are in the good conditions. However, excessive growth may be a sign of the financial bubble that triggers downturns in the economy, which usually occurs after the peak point. In other hands, if GDP growth declines, the country's economy is in recession and can be touches to the trough. At that moment, countries’ government need consider appropriate policies to promote their markets.
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