Australian Economy Essay Example | Topics and Well Written Essays - 2000 words - 3

Australian Economy - Essay ExampleFigure 1 - Historical real gross domestic product proceeds in Australias economy The Australian economy is expected to see a rise of amid 3.75% and 4% in the GDP for the 2011-12 financial year. However certain estimates see this prediction as to a fault high given the current ball-shaped economic climate (Reserve money box of Australia, 2010 Brinsden, 2010). The figure below speaks volumes of the achievement of the Australian politics and the Australian Reserve Bank in keeping the Australian economy planless (Australian Government, 2010 Reserve Bank of Australia, 2010 Bureau of Economic Analysis, 2010). Figure 2 - Comparison of international GDP growth rates The GDP of any nation is composed of the consumption (C), the investiture (I), the brighten governmental fiscal spending (G) and the net exports (X Q) which butt joint be expressed mathematically as Australias response to these components can be used to better delineate the response of the Australian government and the Australian Reserve Bank to deal with the challenges in the wake of the ball-shaped financial crisis. Consumption can be used as a major indicator of the economic situation. Australia saw an increase in retail spending of approximately 0.8% by volume between June 2009 and 2010 which indicates greater consumer confidence (The Australian Bureau of Statistics, 2010). However there is critical denying that the global financial crisis made Australian consumers all the more conservative (Gruen, 2010) as the household nest egg rate went up by 1.3% by May 2010 (Reserve Bank of Australia, 2010). Given that consumption growth only if is responsible for 1.5% of the growth of the Australian GDP, it serves as an important sector. The GDP also witnessed a boost in investment especially in the mining sector although the governments new tax on mining was expected to prohibit further growth. The mining industry witnessed a growth in investment of 29% between June 2009 and 2010 which was around 50% more than expected (Pascoe, 2010). As an initial response to the global financial crisis the government spending shot up dramatically but this was slowed down fearing overstimulation of the economy crowd out of private investment placing a large debt burden. The GDP was positively supported by the net exports as the current account deficit first fell and then went into a positive raft surplus. The increase in net exports can be seen to result from increased demand for Australian minerals in the South East Asian market. Moreover contribution from net exports is expected to rise in 2011 as new capital investment is lowered into mineral operations that will remove bottle necks that sham production capacity (Stutchbury, 2010). The policies and approaches adopted by the Australian government since 2008 have been directed at manipulation the impacts of the global financial crisis. Macroeconomic policies have been specifically designed and geared to minimise damage from the global financial crisis. Moreover another chief aim of these policies remains the provision of adequate exit strategies that would be implemented once economic stability is seen on the horizon. The current fiscal stance of the Australian government is more towards contraction as the budget deficit for 2010-11 was some 40.8