Past Five Years The Australian Economy example essay topic

With reference to economic indicators describe the economic conditions prevailing in the Australian economy over the past five years. Over the past five years the Australian economy has gone through many changes experiencing both the peaks and troughs associated with business cycle. Five years ago, in the middle of 1997 Australia's economic growth had begun to upturn after a period of recession during the '96 year. This was unmistakably shown through the composite indicators of retail trade, dwelling investment and Australian share market valuations, all concurring with one another and demonstrating the effects of an upturn in economic growth. This economic growth continued to increase through '98 and '99, partly being attributed to the weakening Australian dollar that allowed for the opening up and increasing market shares held by Australian exports on world markets. This was the case, as the reduction in the Australian dollar's value, triggered decreases in the prices of our exports for foreign buyers, thereby increasing demand for our products and increasing the amount of money and investments coming into Australia.

This therefore resulting in the aforementioned increases economic growth when combined with the high levels of employment and consumer confidence. This economic growth didn't however continue for long, with the economy peaking just before the start of the year 2000 followed by a sharp downturn that resulted in a temporary recession occurring around the middle of the year. This erratic behavior, most pronounced in retail trade, can be explained by the effects of both the millennium bug and the introduction of a general consumption tax in the form of the GST. The millennium bug caused much panic and with it bought panic spending especially in the IT sector thereby over inflating an already close to booming economy and after the non-event that the millennium (or Y 2 K) bug caused spending slumped and then further slumped due to the holding back of consumer spending on big ticket items such as cars and houses until the introduction of the GST. In spite of the aforementioned pre GST economic slump, in the second half of 2000, with the implementation of the GST and the advent of the Olympics, the economy quickly boomed again before experiencing another sharp downturn followed by an equally sharp upturn.

The initial upturn was due to increased post GST spending followed by huge foreign cash injections into the Australian economy as a result of the Sydney Olympic Games. The Olympics spending however was only temporary and consequently caused a post Olympics downturn, which was quickly countered by the introduction of the first homeowners grant. This grant of $14,000 for people building their first home greatly propped up the housing industry through encouraging many people who would not have otherwise bough houses to do exactly thereby creating upturns in retail sales and hence economic growth. As the year 2001 continued by, the Australian economy stayed strong with the Australian government helping to sustain its growth through lowering interest rates and as such causing increases in investment. This helped the Australian economy to not only defy the global down turning trend, growing at 4.1%, some ten times the OECD average, but also to weather the far reaching effects of the September 11 attacks that not only contributed to the American downturn but also greatly affected many global markets. 2001 also saw a house price boom in Australia with the prices of established residential properties rising an average of 3.8% in the December quarter.

Now in the year the year 2002 the Australian economy continues to be quite strong with no further predicted interest rate cuts, though growth is set to ease to around 3% as the housing market slows slightly. The Australian dollar is on the up and set to reach US 55 c by the end of the year and global activity is predicted to recover as overseas share markets begin to regain past value likely pushing Australian share market prices above the records posted in the March quarter.