project report australia

7/21/2019 project report australia

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[Type text] [Type text] [Type text]

ME-II

Project on AustralianEconomy

1

International Schoolof Business & Media

I

BY:RISH !A!"ESH#AR $% ''()M*HAMMA" +A,HA $% '( )


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Table of Content

1.Introduction .....................................................................................................2-4

2. Australian Govern ent!olicy .........................................................................."

#.$b%ective ...........................................................................................................&-'

4.(et)odolo*y ....................................................................................................

.+". ,cono ic Analysis ofAustralia......................................................................... -1

&. T)e Currentscenario ........................................................................................2 -24

'. /0$TAnalysis ..................................................................................................2"-2&

+. Analysis andindin*s ........................................................................................2'-#2

.eferences ........................................................................................................##

1


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I3T $ 5CTI$3

Australia officially the Commonwealth of Australia is a country comprising the mainland of

the Australian continent , the island of Tasmania , and numerous smaller islands . It is the

world's sixth-largest country by total area . Neighbouring countries include Indonesia , East

Timor and apua New !uinea to the north" the #olomon Islands and $anuatu to the north-east"and New %ealand to the south-east.

&or at least (,((( yearsbefore the first )ritish settlement in the late *+th century. Australia was

inhabited by indigenous Australians , who spo e languages grouped into roughly /( language

groups . After the European disco0ery of the continent by 1utch explorers in *2(2, Australia's

eastern half was claimed by !reat )ritain in *33( and initially settled through penal transportation to

the colony of New #outh 4ales from 2 5anuary *3++. The population grew steadily in subse6uentdecades" the continent was explored and an additional fi0e self-go0erning crown colonies were

established.

7n * 5anuary *8(*, the six colonies federated , forming the 9ommonwealth of Australia. #ince

&ederation, Australia has maintained a stable liberal democratic political system that functions as

a federal parliamentary democracy and constitutional monarchy comprising six states and se0eral

territories . The population of :.2 million is highly urbani;ed and hea0ily concentrated in the easternstates and on the coast.

Australia is a de0eloped country and one of the wealthiest in the world, with the world's * th-largest

economy . In (* Australia had the world's fifth-highest per capita income . Australia's military

expenditure is the world's *:th-largest . 4ith the second-highest human de0elopment index globally ,

Australia ran s highly in many international comparisons of national performance, such as 6uality of

life, health, education, economic freedom , and the protection of ci0il liberties and political rights. Australia is a member of the


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.Commonwealth of Australia

A S+RA,IA.*/ER!ME!+

P*,I0YAustralia is a constitutionalonarc)y 6it) a federal divisionof po6ers. It uses a parlia entarysyste of *overn ent 6it) 7ueen,li8abet) II at its apex ast)e 7ueen of Australia 9 a role t)atis distinct fro )er position asonarc) of t)eot)er Co on6ealt) real s . T)e7ueen resides in t)e 5nited:in*do 9 and s)e is representedby )er viceroys in Australia;t)e Governor-General at t)efederal level and byt)e Governors at t)e state level

-

(** census *,/(3,3*3

1ensity .+F m =::rd >
http://en.wikipedia.org/wiki/Constitutional_monarchyhttp://en.wikipedia.org/wiki/Constitutional_monarchyhttp://en.wikipedia.org/wiki/Federalismhttp://en.wikipedia.org/wiki/Parliamentary_systemhttp://en.wikipedia.org/wiki/Parliamentary_systemhttp://en.wikipedia.org/wiki/Elizabeth_IIhttp://en.wikipedia.org/wiki/Elizabeth_IIhttp://en.wikipedia.org/wiki/Queen_of_Australiahttp://en.wikipedia.org/wiki/Commonwealth_realmhttp://en.wikipedia.org/wiki/Governor-General_of_Australiahttp://en.wikipedia.org/wiki/Governors_of_the_Australian_stateshttp://en.wikipedia.org/wiki/Constitution_of_Australiahttp://en.wikipedia.org/wiki/Canberrahttp://tools.wmflabs.org/geohack/geohack.php?pagename=Australia&params=35_18.48_S_149_7.47_E_type:countryhttp://en.wikipedia.org/wiki/Sydneyhttp://en.wikipedia.org/wiki/National_languagehttp://en.wikipedia.org/wiki/Australian_Englishhttp://en.wikipedia.org/wiki/Demonymhttp://en.wikipedia.org/wiki/Australianshttp://en.wikipedia.org/wiki/Aussiehttp://en.wikipedia.org/wiki/Politics_of_Australiahttp://en.wikipedia.org/wiki/Federal_monarchyhttp://en.wikipedia.org/wiki/Parliamentary_systemhttp://en.wikipedia.org/wiki/Parliamentary_systemhttp://en.wikipedia.org/wiki/Constitutional_monarchyhttp://en.wikipedia.org/wiki/Constitutional_monarchyhttp://en.wikipedia.org/wiki/Monarchy_of_Australiahttp://en.wikipedia.org/wiki/Elizabeth_IIhttp://en.wikipedia.org/wiki/Governor-General_of_Australiahttp://en.wikipedia.org/wiki/Peter_Cosgrovehttp://en.wikipedia.org/wiki/Prime_Minister_of_Australiahttp://en.wikipedia.org/wiki/Tony_Abbotthttp://en.wikipedia.org/wiki/Chief_Justice_of_Australiahttp://en.wikipedia.org/wiki/Robert_Frenchhttp://en.wikipedia.org/wiki/Parliament_of_Australiahttp://en.wikipedia.org/wiki/Upper_househttp://en.wikipedia.org/wiki/Australian_Senatehttp://en.wikipedia.org/wiki/Lower_househttp://en.wikipedia.org/wiki/Australian_House_of_Representativeshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Constitution_of_Australiahttp://en.wikipedia.org/wiki/Statute_of_Westminster_Adoption_Act_1942http://en.wikipedia.org/wiki/Statute_of_Westminster_Adoption_Act_1942http://en.wikipedia.org/wiki/Statute_of_Westminster_Adoption_Act_1942http://en.wikipedia.org/wiki/Australia_Act_1986http://en.wikipedia.org/wiki/Geography_of_Australiahttp://en.wikipedia.org/wiki/List_of_countries_and_dependencies_by_areahttp://en.wikipedia.org/wiki/List_of_countries_and_dependencies_by_areahttp://en.wikipedia.org/wiki/Demographics_of_Australiahttp://en.wikipedia.org/wiki/Australia#cite_note-popclock-7http://en.wikipedia.org/wiki/List_of_countries_by_populationhttp://en.wikipedia.org/wiki/List_of_countries_by_populationhttp://en.wikipedia.org/wiki/List_of_sovereign_states_and_dependent_territories_by_population_densityhttp://en.wikipedia.org/wiki/List_of_sovereign_states_and_dependent_territories_by_population_densityhttp://en.wikipedia.org/wiki/Constitutional_monarchyhttp://en.wikipedia.org/wiki/Constitutional_monarchyhttp://en.wikipedia.org/wiki/Federalismhttp://en.wikipedia.org/wiki/Parliamentary_systemhttp://en.wikipedia.org/wiki/Parliamentary_systemhttp://en.wikipedia.org/wiki/Elizabeth_IIhttp://en.wikipedia.org/wiki/Elizabeth_IIhttp://en.wikipedia.org/wiki/Queen_of_Australiahttp://en.wikipedia.org/wiki/Commonwealth_realmhttp://en.wikipedia.org/wiki/Governor-General_of_Australiahttp://en.wikipedia.org/wiki/Governors_of_the_Australian_stateshttp://en.wikipedia.org/wiki/Constitution_of_Australiahttp://en.wikipedia.org/wiki/Canberrahttp://tools.wmflabs.org/geohack/geohack.php?pagename=Australia&params=35_18.48_S_149_7.47_E_type:countryhttp://en.wikipedia.org/wiki/Sydneyhttp://en.wikipedia.org/wiki/National_languagehttp://en.wikipedia.org/wiki/Australian_Englishhttp://en.wikipedia.org/wiki/Demonymhttp://en.wikipedia.org/wiki/Australianshttp://en.wikipedia.org/wiki/Aussiehttp://en.wikipedia.org/wiki/Politics_of_Australiahttp://en.wikipedia.org/wiki/Federal_monarchyhttp://en.wikipedia.org/wiki/Parliamentary_systemhttp://en.wikipedia.org/wiki/Constitutional_monarchyhttp://en.wikipedia.org/wiki/Constitutional_monarchyhttp://en.wikipedia.org/wiki/Monarchy_of_Australiahttp://en.wikipedia.org/wiki/Elizabeth_IIhttp://en.wikipedia.org/wiki/Governor-General_of_Australiahttp://en.wikipedia.org/wiki/Peter_Cosgrovehttp://en.wikipedia.org/wiki/Prime_Minister_of_Australiahttp://en.wikipedia.org/wiki/Tony_Abbotthttp://en.wikipedia.org/wiki/Chief_Justice_of_Australiahttp://en.wikipedia.org/wiki/Robert_Frenchhttp://en.wikipedia.org/wiki/Parliament_of_Australiahttp://en.wikipedia.org/wiki/Upper_househttp://en.wikipedia.org/wiki/Australian_Senatehttp://en.wikipedia.org/wiki/Lower_househttp://en.wikipedia.org/wiki/Australian_House_of_Representativeshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Constitution_of_Australiahttp://en.wikipedia.org/wiki/Statute_of_Westminster_Adoption_Act_1942http://en.wikipedia.org/wiki/Statute_of_Westminster_Adoption_Act_1942http://en.wikipedia.org/wiki/Statute_of_Westminster_Adoption_Act_1942http://en.wikipedia.org/wiki/Australia_Act_1986http://en.wikipedia.org/wiki/Geography_of_Australiahttp://en.wikipedia.org/wiki/List_of_countries_and_dependencies_by_areahttp://en.wikipedia.org/wiki/Demographics_of_Australiahttp://en.wikipedia.org/wiki/Australia#cite_note-popclock-7http://en.wikipedia.org/wiki/List_of_countries_by_populationhttp://en.wikipedia.org/wiki/List_of_sovereign_states_and_dependent_territories_by_population_density


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notable exercise to date of t)e Governor-General>s reserve po6ers outside t)e!ri e (inister>s re?uest 6as t)e dis issal of t)e 0)itla Govern ent int)e constitutional crisis of 1 '" .

T)e federal *overn ent i s separated into t)ree branc)es@ T)e le*islature@ t)e bica eral !arlia ent 9 de=ned in section 1 of t)e

constitution as co pris in* t)e 7ueen ;represented by t)e Governor-General


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*1jecti2e

T)e ob%ective of t)e study on Australia is to =nd t)e *dp9 une ploy ent

rate9 *ro6t) rate9 in ation rate9 export9 i port9 balance of trade and allot)er data 6)ic) can )elp in studyin* about t)e econo y of t)e country/o alia.

T)is is to analy8e t)e econo y of /o alia and to t)ro6 so e li*)t oncurrent scenario of t)e countryHs econo y. To no6 6)at are t)e stren*t)s96ea nesses of t)e country9 econo y 6ise. To *et a brief idea about 6)atare t)e ne6 opportunities t)at t)e country can prospect and 6)at are t)et)reats to t)e country9 bot) internal as 6ell as external. 0)at are t)e ot)eracroecono ic factors t)at are aJectin* AustraliaHs econo y and to =ndt)e G !9 5ne ploy ent rate9 Gro6t) ate9 In ation ate9 ,xport9 I port9Kalance $f Trade9 and all ot)er data 6)ic) can )elp in /tudyin* about t)eecono y of t)e Country Australia.

T)e " ey econo ic ai s of Australia are@

- ull e ploy ent- /ustainable econo ic *ro6t)

- external stability- fair inco e distribution- eFciency of resource allocation

3ull em4loyment - ull e ploy ent refers to t)e ability of t)ose in t)e6or force 6)o 6ant to be e ployed9 to =nd 6or . Lero une ploy ent cannot beac)ieved as t)ere 6ill al6ays be frictional ;voluntary


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underproduction of *oods and services. It s)o6s t)e econo y operatin* inside t)eproduction possibilities frontier. (ost *overn ents atte pt to controlune ploy ent in order to reduce t)e 6aste of resources and satisfy ore needsand 6ants.

T)e *oal of full e ploy ent is closely related to t)e *oal of eFciency in resourceallocation. In t)is case9 6e are exa inin* t)e eFciency 6it) 6)ic) one particularresource is used9 na ely labour.

Sustaina1le Economic 5ro6th - It occurs 6)en ore *oods andservices are sold in t)e country t)is year t)an 6ere sold last year. T)is eans t)atproduction )as increased. A better de=nition of econo ic *ro6t) ensures t)at itentions sustained increases in t)e productive capacity of t)e econo y9 or t)e

ability of t)e econo y to satisfy t)e needs and 6ants of t)e population.

Real ."P $ 5ross domestic 4roduct adjusted for in7ation) is t)e ostco on 6ay to easure t)e econo ic *ro6t) of an econo y fro year to year.

T)e Australian Kureau of /tatistics ;AK/< de=nes G ! as t)e >unduplicated value of production t)at occurs in Australia in a particular period>. T)is de=nition reco*nisest)at t)e calculation only includes t)e value of =nis)ed *oods and services in t)eecono y. Inter ediate *oods9 suc) as t)e sand used in concrete anufacture ort)e *old used in co puter c)ips9 are deducted fro t)e =nal easure of G !9 andare not counted t6ice N t)us t)e ter >unduplicated>.

Ac)ievin* sustainable levels of around (8 49a econo ic *ro6t) is one of t)eAustralian *overn ent>s ain *oals. T)e *overn ent ai s to ac)ieve consistent*ro6t) 6it)out t)e ne*ative side eJects of unstable prices or poor externalstability. T)e policy approac) adopted by t)e *overn ent 6ill re ect t)ese *oals9even t)ou*) at ti es it ay appear t)at t)ey are co petin*.

E ternal sta1ility - ,xternal stability is 6)en Australia>s external econo icrelations do not )ave ne*ative eJects on t)e do estic econo y. It refers to t)eability of Australia to eet its =nancial obli*ations to t)e rest of t)e 6orld. Itincludes@

&


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Sta1le currency: apid ove ents or excessive uctuations in t)e A5can indicate external instability. It is diFcult for t)e econo y to ad%ust to arapid or lar*e depreciation of t)e A5 . /uppliers ay be unable to c)an*eproduction patterns ?uic ly and consu ers are unli ely to suddenlyc)an*e t)eir spendin* )abits. It 6ill t)erefore i pact on t)e eFcientallocation of resources and destabili8e t)e econo y. Investors also aredeterred as capital out o6 occurs 6it) investors ovin* to ore stableecono ies.

Sustaina1le 0A" @ Australia consistently runs a )i*) CA t)at )asuctuated bet6een about 2M and &M of G !. Capital in o6 in t)e for of forei*n debt or e?uity is needed to =nance t)e CA . T)is adds to t)e interestand dividends Australia ust pay 6)ic) furt)er increases t)e CA . T)is in

turn eans t)at even ore capital in o6s are needed9 and so on96)ic) raises concerns t)at it can lead to a debt trap scenario. It creates acycle in 6)ic) a CA eans t)at t)e Capital and inancial Account surplusust *ro69 6)ic) leads to an even bi**er CA . Alt)ou*) it does not causeany a%or econo ic proble s9 so e international investors ay re*ard a)i*) CA as too ris y to invest in t)e Australian econo y. T)ere is no a*reedset level at 6)ic) t)e CA beco es unsustainable.

Sustaina1le forei5n de1t @ Australia>s forei*n debt is easured in dollarter s and is often ?uoted as a proportion of G !. $ver t)e years9 Australia>sforei*n debt )as been steadily risin* fro %ust over O# billion ;4M of G !< in1 '& to al ost O+ billion ;#1.&M of G !< in 1 +&. In (arc) 2 1 9 it 6asO&"4 billion ;"1. M of G !


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Efficient resource allocation In order to ini i8e 6aste and axi i8e t)eecono ic 6elfare of society9 t)e *overn ent atte s to allocate t)e resources of land9 labour9capital and enterprise ore eFciently. T)e t)ree types of econo iceFciency t)at can be ac)ieved are@

Tec)nical or productive eFciency - related to inputs and outputs inproduction

Allocative eFciency - resources allocated to t)e ost valued uses and leastopportunity cost

yna ic eFciency - t)e ability of t)e econo y to adapt over ti e.

Research Methodolo5y

esearc) is syste atic9 controlled9 e pirical and critical investi*ation of )ypot)etical propositions about t)e presu ed relations a on* natural p)eno ena.;:erlin*er9 1 '#s total 6ealt) is &.4 trillion dollars In 2 129 it6as t)e 12t) lar*est national econo y by no inal G ! and t)e 1't)-lar*est easuredby !!!-ad%usted ; Purchasin5 4o6er 4arity ; PPP < is a co ponent of so e econo ic

+
http://en.wikipedia.org/wiki/Purchasing_power_parityhttp://en.wikipedia.org/wiki/Economic_theoryhttp://en.wikipedia.org/wiki/Purchasing_power_parityhttp://en.wikipedia.org/wiki/Economic_theory


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Sectors wise growth

Industry

Mining

Coal is ined pri arily in 7ueensland9 3e6 /out) 0ales and Dictoria. "4M of t)ecoal ined in Australia is exported9 ostly to ,ast Asia. In 2 S 19 2"+." illiontonnes of coal 6as ined9 and 1 #.& illion tonnes exported. Coal provides about+"M of Australia>s electricity production. In =scal year 2 +S 9 4+' illion tonnesof coal 6as ined9 and 2&1 illion tonnes exported.Australia is t)e 6orld>s leadin*coal exporter.

Australia>s Ar*yle ine is t)e second lar*est dia ond ine in t)e 6orld esti ated

to produce 12.& illion carats in 2 149 6ort) over O" illion.Ar*yle is no6n forproducin* so e of t)e 6orlds ost valuable fancy pin and red dia onds.

Manufacturing

T)e anufacturin* industry in Australia )as declined fro # M of G ! in t)e 1 & sto 12M of G ! in 2 '.

Agriculture

A*riculture contributes #M of Australia>s G ! at t)e far *ate and 6)en value-added processin* beyond t)e far is included t)is =*ure rises to 12M. & M of far

1


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products are exported. Irri*ation is an i portant and 6idespread practice for acountry 6)ere any parts receive lo6 rainfall.

Ser2ices

IT related %obs ;suc) as co puter syste desi*n and en*ineerin*< are de=ned as!rofessional9 /cienti=c and Tec)nical /ervices by t)e epart ent of ,ducation9, ploy ent and 0or place elations of Australia. IT %ob creation occurs ostly int)e state capital cities of Australia .

Finance

Australia>s four >Ki* Kan s> are a on* t)e >0orld>s " /afest Kan s> as of April2 12. T)e four lar*est ban s in Australia are also no6n as t)e R Ki* our R.

Ket6een 1 1 and 2 1#9 #&9'2 er*ers and ac?uisitions 6it) a total no6n valueof 5/O29 4 billion 6it) t)e involve ent of Australian =r s )ave beenannounced. In t)e year 2 1#9 19"1" transactions valued at 5/O'+ billion )ad beenannounced 6)ic) 6as a decrease in ter s of nu bers ; 1+M< and value ; 11Ms avera*e. G ! per capita in Australia avera*ed242+ .1" 5/ fro 1 & until 2 1#9 reac)in* an all ti e )i*) of #'4 2.+"5/ in 2 1# and a record lo6 of 1##"&.1 5/ in 1 &2. G ! per capita inAustralia is reported by t)e 0orld Kan .

1&


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Australia Kalance of Trade

Interpretation @ Australia recorded a trade de=cit of 1#2# A5 (illion in$ctober of 2 14. Kalance of Trade in Australia avera*ed -" .&& A5 (illionfro 1 '1 until 2 149 reac)in* an all ti e )i*) of 222& A5 (illion inebruary of 2 and a record lo6 of -#+ 2 A5 (illion in ebruary of 2 +.Kalance of Trade in Australia is reported by t)e Australian Kureau of /tatistic.

+he 4ast analysis

,cono ic liberalisation and dere*ulation of t)e Australian econo y only be*anunder t)e a6 e abor Govern ent in t)e early 1 + s. T)e *overn ent of oberta6 e co enced t)e process of econo ic refor by concludin* a 6a*es accord6it) t)e trade union ove ent. In exc)an*e for 6a*e restraint and an increase int)e R social 6a*e R t)e trade union ove ent a*reed to support econo ic reforand oppose industrial con ict ;i.e. stri es


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6as also able to privatise several lar*e *overn ent enterprises. T)e Co on6ealt) Kan 6as sold in t)ree parcels bet6een 1 1 and1 &. 7antas 6as sold in t6o parcels9 one in 1 # and t)e ot)er in 1 "9 andt)e Co on6ealt) /eru aboratories 6as oated in 1 4. Telstra 6as sold oJ in

t)ree parcels in 1 '9 1 and 2 &. $ne result of t)ese refor s 6as a ar edincrease labor productivity9 and a reduction in *overn ent spendin* as aproportion of G ! . T)e Australian /toc ,xc)an*e i ited ;A/W< 6as for ed in1 +' t)rou*) t)e a al*a ation of six independent stoc exc)an*es t)at for erlyoperated in t)e state capitals. ,ac) of t)ose exc)an*es )ad a )istory of s)aretradin* datin* bac to t)e 1 t) century.

T)is process of econo ic refor and restructurin* continued under t)e Co-alitionGovern ent led by Eo)n o6ard 6)ic) too po6er in 1 &. T)e o6ardGovern ent establis)ed a Goods and /ervices Tax ;2


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AustraliaHs econo y )as been one of t)e ost resilient in t)e $,C durin* t)erecent econo ic crisis9 boosted by de and for its co odities fro C)ina. T)e

country recorded only a solitary ?uarter of econo ic contraction9 6it) *ro6t)increasin* 1.2M in 2 . Australia recorded consistent =scal surpluses in t)e yearsleadin* up to t)e econo ic crisis due to favourable econo ic circu stances and asound =scal fra e6or . In 2 9 t)e =scal balance s)ifted into ne*ative territory96it) Australia recordin* a de=cit of 4. M of G !. Gross debt )as re ainedrelatively stable at around 2 M of G !9 si*ni=cantly belo6 t)e $,C avera*e . T)eAustralian econo y rebounded by #.1M fro Eune 2 -Eune 2 1 9 and t)e $,Cpro%ects it to experience solid *ro6t) a*ain in 2 11 boosted by do estic de andand a boo in* export sector.

1


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Balance of 4ayment

In trade ter s9 t)e Australian econo y )as )ad persistently lar*e current accountde=cits ;CA s< for ore t)an " years. $ne sin*le factor t)at under ines balanceof pay ents is Australia>s narro6 export base.

ependent upon co odities9 t)e Australian *overn ent )as endeavoured toredevelop t)e Australian anufacturin* sector. T)is initiative9 also no6n asicroecono ic refor 9 )elped Australian anufacturin* to *ro6 fro 1 .1M in1 +#N1 +4 to 1'.+M in 2 #N2 4.

T)ere are ot)er factors t)at )ave contributed to t)e extre ely )i*) current

account de=cit in Australia suc) as lac of international co petitiveness.[1 ]

o6ever9 as Australia>s CA is al ost entirely *enerated by t)e private sector9 asoutlined in !rofessor Eo)n !itc)ford>s >Consentin* Adults T)esis> in t)e early 1 s9t)ere is an ar*u ent t)at t)e CA is not a si*ni=cant issue. istorically9 Australia)as relied on overseas capital to =ll t)e *ap bet6een do estic savin*s andinvest ent9 and any of t)ese invest ent opportunities could not )ave been

2
http://en.wikipedia.org/wiki/Current_account_deficithttp://en.wikipedia.org/wiki/Current_account_deficithttp://en.wikipedia.org/wiki/Balance_of_paymentshttp://en.wikipedia.org/wiki/Balance_of_paymentshttp://en.wikipedia.org/wiki/Economy_of_Australia#cite_note-109http://en.wikipedia.org/wiki/Current_account_deficithttp://en.wikipedia.org/wiki/Current_account_deficithttp://en.wikipedia.org/wiki/Balance_of_paymentshttp://en.wikipedia.org/wiki/Balance_of_paymentshttp://en.wikipedia.org/wiki/Economy_of_Australia#cite_note-109


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1istribution of familyincome - !ini index

:(.: = ((+>:/. =*88 >

)udget revenues! 8 .: billione"penditures! /* . billion = (*: est.>

Taxes and other re0enues ::. G of !1 = (*: est.>

)udget surplus =J> ordeficit =->

-*.:G of !1 = (*: est.>

ublic debt : .2G of !1 = (*: est.>: . G of !1 = (* est.>

Inflation rate =consumerprices>

. G = (*: est.>*.+G = (* est.>

9entral ban discount rate :G =&ebruary (*: est.>.:/G =:* 1ecember (*( est.>note! this is the Beser0e )an of Australia's Kcash ratetarget,K or policy rate

9ommercial ban primelending rate

2. G =:* 1ecember (*: est.>2.8+G =:* 1ecember (* est.>

#toc of narrow money / 2./ billion =:* 1ecember (*: est.>/: .+ billion =:* 1ecember (* est.>

#toc of broad money *.22* trillion =:* 1ecember (*: est.>*.2 + trillion =:* 1ecember (* est.>

#toc of domestic credit . trillion =:* 1ecember (*: est.>. // trillion =:* 1ecember (* est.>

ar et 0alue of publiclytraded shares

NA =:* 1ecember (* est.>*.*8+ trillion =:* 1ecember (**>*. // trillion =:* 1ecember (*( est.>

Agriculture - products wheat, barley, sugarcane, fruits" cattle, sheep, poultry

Industries mining, industrial and transportation e6uipment, foodprocessing, chemicals, steel

Industrial productiongrowth rate

:. G = (*: est.>

9urrent Account )alance - .8 billion = (*: est.>

2#


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- /3.* billion = (* est.>

Exports /*.3 billion = (*: est.>/3.8 billion = (* est.>

Exports - commodities coal, iron ore, gold, meat, wool, alumina, wheat,machinery and transport e6uipment

Exports - partners 9hina 8./G, 5apan *8.:G, #outh orea +G, India.8G = (* >

Imports /.+ billion = (*: est.>2: billion = (* est.>

Imports - commodities machinery and transport e6uipment, computers andoffice machines, telecommunication e6uipment andparts" crude oil and petroleum products

Imports - partners 9hina *+. G,

Beser0es of foreignexchange and gold

+.+ billion =:* 1ecember (*: est.>8.*/ billion =:* 1ecember (* est.>

1ebt - external *./(2 trillion =:* 1ecember (*: est.>*. 83 trillion =:* 1ecember (* est.>

#toc of direct foreignin0estment - at home 22*.2 billion =:* 1ecember (*: est.>2*(.+ billion =:* 1ecember (* est.>

#toc of direct foreignin0estment - abroad

(.* billion =:* 1ecember (*: est.>2 billion =:* 1ecember (* est.>

Exchange rates Australian dollars =A per (.82/+ = (* est.>*.(8( = (*(>*. + = ((8>*. (/8 = ((+>

&iscal year * 5uly - :( 5une

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Milestone (:

S#*+ Analysis

Developing a plan for Australia's economic prosperity , 6eanalyse t)e outloo for t)e Australian econo y over t)e next century in a novel6ayB ta in* a /0$T analysis N a tool ore co only used in business plannin*and strate*y9 and applyin* it to a nation.

Ky considerin* t)e stren*t)s9 6ea nesses9 opportunities andt)reats facin* Australia9 6e as 6)at suc) an analysis can tell usabout t)e Australian econo y9 no6 and in t)e future9 and 6)atpolicy responses 6e s)ould be developin* no6. T)e table belo6su arises our )i*) level perspective .

Stren5ths

0e>ve en%oyed t)e fruits of a )i*)-perfor in* econo y and*ro6in* livin* standards9 and developed t)e con=dence t)atco es 6it) )avin* strutted t)rou*) a *lobal econo ic crisis 6it)barely a scuJed s)oe. T)an s to so e funda ental stren*t)sunderpinnin* t)e Australian econo y9 t)in*s are *oin* 6ell.

S% S* !" E0*!*MI0 P*,I0Y S; S+R*!. A!" RESI,IE!+ E0*!*MY S= .E*.RAPHY> !A+ RA, E!"*#ME!+S A!" EMER.I!. ASIA

#ea?ness0ea nesses can>t al6ays be overco e9 but it>s i perative t)at t)ey areunderstood and ac no6led*ede in planning. #o what limitations are we facing right now and intothe futureL

#% PR*" 0+I/I+Y .R*#+H#; S+A+E & 3E"ERA, RE,A+I*!S A!" +A< +RA!S3ER SYS+EM#= I!3RAS+R 0+ RE "E3I0I+

Opportunities

2"
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Ky any easure or co parison9 t)e Australian econo y isperfor in* 6ell. Kut Australians are livin* t)rou*) a period of*reat *lobal econo ic9 tec)nolo*ical9 political and social c)an*e9and 6e si ply can>t expect t)at t)e 6ay t)in*s are no6 is t)ey

6ay t)ey al6ays 6ill be. /o 6)at are t)e bi* opportunities forAustralia in t)e futureX

*% .,*BA, E0*!*MI0 S+R 0+ RA, 0HA!.E*; SEI@E +HE *PP*R+ !I+Y 3*R RE3*RM*= .REA+ER "IP,*MA+I0 R*,E

+hreats

0e live in a co petitive9 *lobalised 6orld and t)reats to ourecono y and future prosperity can co e fro else6)ere as 6ellas fro 6it)in. /o 6)at t)reats ust 6e be a6are of9 and see toiti*ate9 in plannin* for our futureX

+% E


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&ilestone '! Analysis and finding

Australias Economic Forecast

Spurred by robust business and consumer confidence, Australias economy is expected

to grow even quicker in the next five years. 2011 to 2015 should see Australias

GDP (PPP) grow by 4.81 to 5.09 er!e"t a""ually. #y the e"d o$ 2015%

Australias GDP (PPP) is e& e!ted to be ' 1.122 trillio".

Likewise, Australias !" #"""$ per capita is expected to experience healthy growth. *"

2010% Australias GDP (PPP) er !a ita was the te"th highest i" the world +

growi"g $ro, ' -8% --.1/ i" 2009 to ' -9% 92.0 . %n &'((, Australias !"

#"""$ per capita will increase by ).*& percent to +S -(,' /.(0. 1he following four

years should see fairly consistent growth in Australias !" #"""$ per capita, resulting

in a !" #"""$ per capita of +S -0,--*.* by the end of &'(*.

2owever, despite Australias strong economic growth, Australias unemployment rate

has been relatively high. *" 2010% Australias u"e, loy,e"t rate was 5.192

er!e"t + 0.22 er!e"t ,ore tha" the worlds a erage o$ 4.9/ er!e" t.

%n an interview given before the 3ay &'(( budget, Australias 1reasurer and !eputy

"rime 3inister, 4ayne Swan, acknowledged that unemployment was unacceptably high

in certain parts of Australia and the government was looking to create new incentives

for more 5obs. 1he 3ay &'(( budget is expected to create *'','' ' 5obs in two years

and is aimed at bringing unemployment rates down to -.* percent.

4hether this budget will prove successful in bringing down unemployment rates

remains to be seen. According to the unemployment rate forecast provided by the %36,

unemployment is only expected to see a marginal decrease to *.'&* percent by the

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end of &'(&. After which, the unemployment rate from &'() to &'(* should remain

constant at -. percent.

3indin5sAustralia )as en%oyed an uninterrupted run of t6enty-t)reeconsecutive years of econo ic *ro6t). All t)e ore i pressive*iven t)at t)is period 6as straddled by t)e Global inancial Crisis;G C


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fro C)ina>s debt fuelled residential construction andinfrastructure bin*e )as beco e consensus. osses on investedcapital )ave t)e potential to cause businesses and ban s to failin C)ina 6)ic) 6ould inevitably lead to a prolon*ed period of

uc) lo6er =xed asset invest ent. In turn9 t)is is li ely totranslate into lo6er de and for Australian ra6 aterials9includin* coal and iron ore. urt)er9 any slo6do6n is li ely to)ave noc -on eJects to C)ina>s a%or tradin* partners9 reducin**lobal output potential.

/econdly9 t)e increase in )ouse)old consu ption and residentialconstruction over t)e last 12 ont)s re ains on a rat)er fra*ile

footin*. T)e resur*ent consu er )as been buoyed by )i*)erasset prices9 t)e sustainability of 6)ic) is ?uestionable./)are ar ets are priced for perfection. ecent *ains could easilybe eroded *iven t)e fra*ility of *lobal *ro6t) and t)e seriousecono ic and *eopolitical ris s t)at abound. ouse price *ainstoo )ave been spurred by lo6 interest rates rat)er t)an any realfunda ental and sustained i prove ent in inco es or 6ealt).,xpectations of furt)er )ouse price *ains are probably unrealistic*iven t)at )ouse prices and debt levels re ain a on*st t)e)i*)est in t)e 6orld 6)en easured relative to inco es.

In conclusion9 t)e Australian econo y re ains reasonablypositioned to record furt)er *ro6t) in t)e s)ort ter .3evert)eless9 t)e drivers of *ro6t) are relatively fra*ile and so asustained ulti- year *ro6t) cycle appears unli ely.

.lo1al ca4ital is scared and e 4ensi2e

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Alt)ou*) t)e ?uantity of *lobal capital )as recovered and even

surpassed levels fro before t)e *lobal =nancial crisis ;esti ated

at O24 trillion id-2 1#


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i*) returns could be expected if t)ere is excess do estic capital

6illin* to venture into *lobal opportunities9 6)ile ot)er countries

stic to )o e ar ets.

T)e infrastructure invest ent needs in Asia are assive9

re?uirin* lots of fundin*. Indonesia9 for exa ple9 needs ore

t)an O# billion in infrastructure invest ent.

o6ever9 ris averse and expensive capital brin*s t)reats as

6ell. If capital is not available or invested in lo6 productive

alternatives9 local enterprises beco e capital starved9 6)ic) in

turn sti es *ro6t).

In an opti istic scenario9 Australia could beco e a

capital-exportin* country. Its capital 6ill *enerate )ealt)y

returns in t)e *lobal ar etplace9 t)e abundance of

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invest ent opportunities 6ill a e diversi=cation easier9

and t)e country 6ould bene=t fro a )ealt)y *lobal

portfolio.

In a pessi istic scenario9 do estic capital is loc ed up9

forcin* Australia to i port capital for 6)ic) )i*) returns

6ill be de anded. T)is 6ill slo6 do6n invest ents and

lead to on avera*e lo6 returns9 lo6 innovation9 and )i*)

costs.

Cey natural resources 6ill 1ecome more scarce

e and for ener*y9 steel9 food9 and 6ater )as been *ro6in* over

t)e past several decades.

In t)e years to co e9 de and for natural resources 6ill continue

to *ro69 puttin* ore pressure on prices and potentially on

*eopolitical stability.

T)e increase in de and is underpinned by a 6orld6ide

population expansion and accelerated inco e *ro6t) in

e er*in* econo ies 6it) up to t)ree billion ore iddle-class

consu ers expected by 2 # .

!rice volatility9 6)ic) )as already increased over t)e past

decade9 is expected to continue to rise as a result of increasin*ly

)arder-to-=nd resources and t)e use of ore expensive

et)odolo*ies to source t)e supply.

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or Australia9 *lobal scarcity of resources can be *ood ne6s. If

t)e country can aintain its surplus of ey resources9

opportunities 6ill be plentiful.

As a resource-exportin* country9 Australia 6ill be 6ell-positioned

to pro=t fro t)e increased *lobal de and and )i*)er prices on

*lobal ar ets. Greater de and 6ill also brin* develop ent

opportunities in various sectors9 includin* a*riculture and

infrastructure9 6)ic) in turn 6ill attract forei*n invest ent.

In an opti istic scenario9 Australia is a diversi=ed resource

exportin* country. T)e econo y 6ill bene=t fro do estic

resource availability and )i*) export prices. Invest ents in and

innovation by resource sectors suc) as infrastructure9 a*riculture9

and inin* 6ill underpin econo ic *ro6t). Innovation beco es a

co petitive advanta*e and is levera*ed on a *lobal scale.

In a pessi istic scenario9 Australia is no lon*er a pure exporter

but relies ore on i ports. (ore i ports creates ore exposure

to price volatility on *lobal ar ets9 6)ic) 6ill add costs to

sectors of t)e econo y and sti e *ro6t). Constrained

invest ents lead to subopti al resource productivity as a result

of a lac of tec)nolo*ical develop ents and innovation.

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