Australian Current Economic Situation

Australian Current frugal dapple The current Australian economy is execute significantly well and the future prospects looks positive, prone the unfavourable globose environment. Australia continues to be a world leader in the spherical rec everywherey, with lower unemployment, lower debt and stronger bristleth than new(prenominal) countries. Australias economy is expected to grow by 3. 25 share in late 2010 and 3. 75 percent in 2011 (Table 1) (RBA, 2010). This comp muster ups a further result in employment with descents change magnitude by 353,200 over the past social class (Wayne Swan, 2010).However collectable to world(a) incertitude, consumer confidence and the increased financial marketplace volatility could start to impact on the growth of Australia. Table 1 verbotenturn Growth and Inflation Forecasts Per cent, over stratum to quarter shown fall2009 June2010 Dec2010 June2011 Dec2011 June2012 Dec2012 gross domestic product growth 2. 7 2? 3? 3? 3? 3? 4 Non-farm GDP growth 2. 5 2? 3? 3? 3? 3? 4 cost-of-living index rising prices 2. 1 3? 3? 3 2? 3 3 Underlying inflation 3? 2? 2? 2? 2? 3 3Source RBA, 2010 The early stages of the frugal recovery shows the pace of growth re master(prenominal)s uneven with some advanced economies until now fragile, with concerns with US growth and European debt , charm Asia is rapidly growing with growth forecasts for mainland mainland China from 10. 0 to 10. 5 percent in 2010 (Wayne Swan, 2010). Due to this growth and support of Asia, state-supported investment and exports bequeath be the backbone growth engines for Australia in 2011 and 2012, along with the housing construction boom (Rowan Callick, 2010).This will follow an increase in GDP and will continue to strengthen with the help of the monetary and fiscal stimulus by increasing consumer confidence through supporting the economy, which in turn will increase expense in households. The strong recovery in the Asian region ha s helped Australia emerge from the world(prenominal) downturn and has dramatically increased Australias main commodities prices in iron ore and coal and will continue to increase over the undermentioned decade.The Australian Bureau of Statistics displays a 23 percent rise in the cherish of iron and copper ore exports and a 15 percent increase for coal, which is mainly due to the increasing volume (The China Post, 2010). This has twofold the forecasts to post a record periodic trade surplus of 3. 54 trillion dollars in June 2010 (AFP, 2010). Terms of trade be forecasted to increase further while in that location will be a metier term decline, as supply expansions fall online and increasing prices of steel dampen end-user demands ( represent 1)(RBA, 2010). Graph 1 Terms of tradeSource RBA, 2010 Due to the heights terms of trade, higher income will be evident and in that respectfore nominal GDP is forecasted to grow by close to 10 per cent over 2010 (RBA, 2010). The high t ake of commodity prices and the terms of trade atomic number 18 contri more thanovering to a strong sentry for investment in the mining sector, with high demands from China. Although the introduction of mining tax threatens investments and future exploration in Australia (Philip Kirchlechner, 2010). The Reserve Bank of Australia left its matter to regularise unchanged at 4. percent on the third of august 2010, as the headline inflation account came in at 3. 1 percent, while the inherent inflation rate fell to 2. 7 percent. (David Olsen, 2010) This is within the RBAs target range, meaning it rules out an interest rate increase. Headline and cardinal inflation rates are forecasted to be 2. 75 percent by Dec 2011 and to reach 3 percent by June 2012. (Table 1) (RBA, 2010). With jobs increasing over the past year more consumers are working, meaning job security is much stronger, as the unemployment rate has declined and is expected to fall further in the year ahead.Consumer attitu des have improved in the past month, which may have been impacted by the interest rate apprehensioning put, but there are still not enough signs that consumers want to open their wallets more widely and start spending more. This could withal be impacted by the inquiry of higher interest rates, as there are concerns about the health and uncertainty of the global economy and increasing good charges and council rates are establishing more orthodox spending and borrowing approaches (Craig James, 2010).Australias unemployment rate in July 2010 was 5. 3 percent and is reported by National Australia Bank chief economic expert Allan Oster to further fall to 4. 5 percent over the course of the next 12 months (Graph 2) (Lexi Metherell, 2010). Furthermore Australia unemployment rate is lower than some other major countries in the world with the coupled States having an unemployment rate of 9. 5 percent in July 2010 (Swan w. and tanner L, 2010). Graph 2 Unemployment rate Source Austra lian Bureau of Statistics, 2010References * AFP, 2010. Commodities promote record Australia trade surplus. Online purchasable at<http//www. google. com/hosted news program/afp/article/ALeqM5hUrzVBXJkBd80gIbVHZbWlsK-Tmw> Accessed 14 shocking 2010. * Australian Bureau of Statistics, 2010. Labour Force, Australia. Online Available at<http//www. abs. gov. au/ausstats/emailprotected nsf/mf/6202. 0> Accessed 16 August 2010. * Craig James, 2010. Weakest spending since global financial crisis. Online Available at <http//www. switzer. com. u/ backup-news/news-stories/weakest-spending-since-global-financial-crisis/> Accessed 16 August 2010. * David Olsen, 2010. RBA rate rise ruled out as inflation fall. Online Available at <http//www. dynamicbusiness. com. au/articles/articles-finance-cash-flow/rba-rate-rise-abs-june-cpi-inflation-data-1849. hypertext mark-up language> Accessed 15 August 2010. * Lexi Metherell, 2010. Unemployment tipped to stay steady. Online Available at <http//www. abc. net. au/news/stories/2010/08/12/2980536. htm> Accessed 16 August 2010. * RBA, 2010, Economic Outlook. Online) Available at <http//www. rba. gov. au/publications/smp/2010/may/pdf/eco-outlook. pdf> Accessed 14 August 2010. * Rowan Callick, 2010. Asian boom will support our long picture. Online Available at< http//www. theaustralian. com. au/business/asian-boom-will-support-our-long-term-picture/story-e6frg8zx-1225905071813> Accessed 14 August 2010. * Swan w. and Tanner L. , (2010), Economics Statement, July, 2010, Canberra Department of Treasury, July, 2010. * The China Post, 2010. (Online)