Economic Forecast of Australian-Free-Samples-Myassignmenthelp.com

Question: write a report on the Economic Forecast of Australian Economy. Answer: Introduction This report outlines the Economic forecast of Australian economy. It is based on the economic performance of the economy with the results of central bank decisions and monetary policy. The economic growth of Australia is possibly remaining stable in next few months. The expected growth rate of the economy is around 2.5% till the end of first quarter of 2018 (TradingEconomics, 2017). The agendas like climate change, free trade were discusses in G20 which will affect the export and imports of the economies (Flynn and Hughes, 2017). The report will help to understand the impact of global decisions on an economy. The unemployment rate will also have possibility to increase due to crisis in mining, banking and real estate, whereas construction and affordable housing sector will remain boomed with continuous demand. Reserve bank of Australia cash rate is still stable so its impact on the banking sector and economy are also reported. The impact of Donald Trump decision will negatively impac t Australian economy with increase in demand of US$ and restrictions on free trade results to lower exports and imports in the country (Janda, 2017). Economic forecast: Economic forecast can be said as a way of guessing the future economic condition of an economy. It is macroeconomic aspect of the study which predicts the situation on the basis of the gross domestic product, inflation rate or Unemployment (Mankiw, 2014). Decisions of the central bank are also important drivers for the economic growth forecast in a country. It is observed that the cash rate of Australia in the current year is lowest in comparison to the past years. It is stable at 1.5 since the starting of the year 2017 which indicates the decision of central bank towards strengthening the Australian dollar in the international market (Reserve bank of Australia, 2017). The lower cash rate indicates that the loans are cheaper in the country which wills results to more consumption in households and industries due to higher loans in this sector. The high exchange rate is also looking problems due to which it is assumed that inflation and growth rate will arise a little bit at the end of the year. Figure 1: Cash Rate: Source (Reserve bank of Australia, 2017) As the economy is moving towards strengthening it is also estimated to increase in the inflation. New entry of competition from FDI in retail sector will also boost economy. Low interest rates results to increased export of goods which raised demand of Australian dollar (Shaffer, 2017). Increase in the Australian dollar has resulted to high exchange rate which is considered as a constraint in the economic growth of the economy, there is also a threat of hitting economic activity and inflation if the same problem continues in this quarter. Figure 2: Australia Inflation rate: Source (Trading Economics, 2017) On the basis of the evidences and steps taken by the central bank it can be forecasted that the country is on the track of economic development although it will take around two or more years to perform (Finder.com.au, 2017). Still the increase in the inflation, property prices in the various parts of the country and rise in the wage rate will result to increase in the production in the country which will also result to increase in the GDP at the starting of year 2018. The interest rate is going to be stable till the end of the year due to low inflation growth, low wage growth and higher dollar price. Aggregate demand consists of several factors like spending on investments, consumption, government consumption and difference between exports and imports. Aggregate supply is the planned performance at various prices of the products. Both the curve together helps to determine the economic growth of the country (Rao, 2016). AD/AS model is basic tool showing all the factors at single point with having flexibility to aggregate demand in short run and aggregate supply in long run. Growth and recession in AD/AS model is as below: Figure 3: AD/AS Model Incorporates Growth, Unemployment, and Inflation (Rao, 2016 References: Finder.com.au (2017) RBA Cash Rate. [Online]. Available at: https://www.finder.com.au/rba-cash-rate (Accessed: 22 August 2017). Flynn, E and Hughes, (2017) WORLD LEADER SUMMIT What is the G20, how long is the 2017 summit in Hamburg , which countries are members, and whats on the agenda?. [Online]. Availabel at: https://www.thesun.co.uk/news/1727642/g20-memebers-hamburg-summit-2017-agenda/ (Accessed: 22 August 2017). Janda, M. (2017) Australia's economy: The Murphy's Law forecast for 2017. [Online]. Available at: https://www.abc.net.au/news/2017-01-06/murphys-law-guide-to-australian-economy/8163918 (Accesses: 28 August 2017). Mankiw, N. G. (2014)Principles of macroeconomics. USA: Cengage Learning. Rao, B. B. (2016) Aggregate demand and supply: A critique of orthodox macroeconomic modelling. Germany: Springer. Reserve bank of Australia (2017) Cash rate. [Online]. Available at: https://www.rba.gov.au/statistics/cash-rate/ (Accessed: 22 August 2017). Shaffer, L. (2017) RBA keeps interest rates unchanged, pointing to strengthening Aussie dollar, housing concerns. [Online]. Available at: https://www.cnbc.com/2017/07/03/reserve-bank-of-australia-policy-decision-on-interest-rates.html (Accessed: 22 August 2017). Trading Economics (2017) Australia inflation Rate. [Online]. Available at: https://tradingeconomics.com/australia/inflation-cpi (Accessed: 22 August 2017). TradingEconomics (2017) Australia | Economic Forecasts | 2017-2020 Outlook. [Online]. Available at: https://tradingeconomics.com/australia/forecast (Accessed: 31 August 2017).