The economic growth is an important aspect for not only Australia, but for any country if
it strives to maintain an equitable and sustainable existence. The growth of economy allows the
country to have an optimum standard of living for its people and people are in a position to find
work for them. The various benefits which Australia has received over the last ten years (2007 to
present) precisely, is found to be quite impressive when it is compared with the other decades
(Battalion., 2010).
The total number of jobs has increased over the years, approximately amounting to about
2% increase on an average annually thereby ensuring that the work age population balance is
being maintained and the workforce in this age group are able to meet the economic standards
thereby eliminating any issues related to unemployment or reducing it to the minimum extent.
This is suitably expressed when it found that the unemployment rate for Australia has come
down from the previous estimation of approximately 95 to that of the approximation of 5%
(Bruinsma., 2017). The economy of Australia has consistently started showcasing aspects related
to economic growth which has been remarkable over the years and has created an unprecedented
economic growth and history among the other developed economies of the entire world.
The annual growth rate of the GDP is largely based upon the local market prices and
correlated with that of the local currency of the place. The GDP is basically the sum total of the
entire gross value added by the different producers of the country within the economy with the
addition of any other tax added to the existing product and with the deduction of the subsidies
that are not included with the overall value which is associated with the product (Battellino.,
2010).
The calculation is based upon the deductions made in the depreciation of the assets which
have been fabricated or even amounting to the degradation or depletion of the different natural
resources. The year 2017, encountered a real growth of GDP for Australia which was
remarkably2.3% (Bruinsma., 2017). Though the real GDP growth of Australia underwent
substantial fluctuations in the recent times, the decrease was encountered largely between 2007-
2017 periods which finally ended at a GDP of 2.3% in the year 2017.
Factors which led to variations of growth rate
The growth related productivity is largely corresponding to the efficiency of the economy
for employing the different resources so as to produce the desired amount of output required in
the economic domain. The amount of growth happens to be the key driver for the corresponding
productivity in terms of per capita income which further is related to the average living standard
of its people in the long run.
The trend of the growth in productivity is largely determined by the overall development
of the new found technologies and the efficient utilization of the resources in terms of capital,
fixed assets and the labour which also includes land. These attributes are organized in the form
of a production related process where the different factors are determined as a capacity of the
economy for the supply of different goods and services which do not directly respond to the
monetary policy within the short time span. In spite of this, as a result of the pressures
corresponding to inflation, reflecting the supply balance in line with that of the growing demand
within the economy (Connolly et al., 2013).
The trends in productivity happen to serve as important determinants for the overall pace
in which the economy is developing and generating the corresponding inflation related pressures.
It is important to understand the overall developments for the particular productivity growth
trends and thus it is important o consider the formulation of policy with regard to money.
A number of analysts and commentators working in this field have recognized the
importance of the slowdown of the productivity growth around the year 2000 when compared
with that of the previous years in the 90’s when the growth of economy was extremely high and
strong (Bruinsma., 2017). This slowdown is evident regarding the fact that the entire focus is on
the market which mostly accounts for the two third output when compared with the previous
data. There can be independent measurement of the input and output in the entire market sector
for the proper calculation of the entire outcome based upon productivity which is possible for
direct calculations. However, as far as the non market sector is concerned, it is a part of the
larger industry towards the health and education and there is no transaction in the market with
regard to output thereby making it difficult, the measurement of output as the productivity is
largely dependent on the inputs independently (Martin et al., 2016).
The labour productivity and its growth have been found to be typically higher compared
to that of the multifactor productivity. It is due to the fact that the additional labour productivity
which has been generated as a result of the capital deepening as a measure of the ratio of the
capital to labour has been found to grow over a period of time (Battellino., 2010).
The decomposition of the growth of labour productivity within that of the capital
deepening process and that of the multifactor productivity growth has been found to indicate that
there has been a slowdown in the overall process of labour productivity which is basically a
result of the slow growth in the aspects related to the multifactor productivity. Post 2000, the
capital deepening towards the growth of labour productivity have been found to be larger
compared to the times before 2000. It is largely the result of the fact that the accumulation of
investment and capital were considerably strong around the year 2000 which was largely a
reflection of the increase in the overall share of the resources which has been used for the rapid
expansion of the industries which are working in the mining and utility sector (Carle and
Christie., 2017).
However, to an utter surprise, in spite of the higher levels of investment among these two
sector of industries, the capital deepening which has been found among them and stalled within
this particular period from 2007-2017 have been found to largely increase the inputs of labour.
Outside the different industries, the capital deepening and its pace has been found to be more or
less similar with that of the times before 2007 and the slowdown in the overall growth of labour
productivity has been found to be a result of the growth which occurred in the multifactor
productivity. The capital deepening and the corresponding multifactor productivity for the labour
intensive processes were reported to be 1.8% and -0.4% respectively (Carle and Christie., 2017).
The overall labour productivity for the years 2010 to 2011 has been found to be 1.4%
respectively. This trend has been reported for the market sector industries operating in Australia.
However, the trend for mining intensive industries showcase some amount of variation where
capital deepening has been reported to be 1.3 % in 2010-11 and 0.4 % for the multifactor
productivity for the same years (Battellino., 2010). The overall labor productivity has been found
to be 1.7% for the same years.
Other Factors
Rising demand of Services
A few factors also include the rising demand which has been created in response to the
various services. The overall increase in the service sharing in the Australian economy has been
found to showcase a reflection regarding the growing demand for services of different kinds by
the consumers in a largely significant manner. This attribute largely lies in the fact that the real
income of the people have increased over the years , thereby the consumption share of the
individual consumers have increased enabling them to largely rely on the service centric industry
which rose from a mere 405 of the total economy to a whopping 60% which is a significant
value. This reflection is largely dependent upon the rising costs in response to expenditure as a
result in the sectors corresponding to education, health, finances and other recreational services
respectively (Carle and Christie., 2017).
Industrialization in Eastern Asia
The industrialization of the Eastern Asia and economic emergence of eastern Asia as a
major producer had a landmark effect on the entire structural economy of not only Australia but
of the entire world. The manufacturer of goods has been largely shared by the global
manufacturers and around 2007-08, it has been found to be of comparative advantage which has
been owned as result of the low cost of labour (Battellino., 2010). This particular process was
initiated by Japan and then the industrial economies of the Eastern part of Asia, particularly
China happened to mirror in, showcasing its share within the Australian economy.
Reforms in the economic domain
The different economic reforms which have been considered by the Australian
government from time to time showcase the overall improvement in the efficient ways through
which the Australian economy has undergone structural changes (Martin et al., 2016). A number
of these reforms are largely restructured and deregulated with regard to a range of various
service centric industries. This in line has also occurred as a result of the overall reduction in the
trade protection levels which are being provided for the industries which are involved in the
manufacturing of goods.
The different policies which have been designed in order to promote the greater range of
competition in response to the various service centric industries which are operational have been
found to enhance their fair amount of share in the entire economy. Particularly, the entire
financial industry which got deregulated before the 2000s, let to the introduction of the
superannuation which was made compulsory in order to support the growth and diversification
of the banking and financial industry management (Martin et al., 2016). The restructuring of the
different services which were otherwise provided by the monopolies of the government
previously enhanced the utilities and competition thereby enhancing the transport and
communication industries.
Major challenges faced by Australia towards enhancement of growth rates
The year 2014- 15 saw skewed economic growth for Australia of about 2.3% below the
trend line. The year 2015 and 2016 however showed positive growth of a little more than 2.5%.
One of the major challenges is the financial reforms which have happened, as the middle class
population of Australia, a majority of who are Chinese has enhanced and the middle class people
have better demands for housing and other basic amenities (D'Arcy et al., 2013). The rising
number of middle class people in China which is way more than the actual population of
Australian natives is not only a point of concern but also an opportunity for making major
reformations in the financial markets. The interest rates of bank if made flexible or free will
increase tremendous amount of competition and pressure for the financial institutions. The
overall aspects are the high exchange rates and things which are imported have a strong foothold
on the Australian economy.
References
Bruinsma, J. (2017). World agriculture: towards 2015/2030: an FAO study. Routledge.
Battellino, R. (2010). Twenty years of economic growth. Structural Change in the Australian
Economy 1 Durable Goods and the Business Cycle 11 Economic Change in India 19
Ownership of Australian Equities and Corporate Bonds 25 Interpreting Market
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Connolly, E., Davis, K., & Spence, G. (2013). In Publications. Age, 60, 100.
Carley, M., & Christie, I. (2017). Managing sustainable development. Routledge.
D'Arcy, P., Gustafsson, L., Lewis, C., & Wiltshire, T. (2013). In Publications. Life, 912, 36.
Martin, D., Trigger, D., & Parmenter, J. (2016). Mining in aboriginal Australia: economic
impacts, sustainable livelihoods and cultural difference at Century Mine, northwest
Queensland. Natural Resource Extraction and Indigenous Livelihoods: Development
Challenges in an Era of Globalization, 37.
McCombie, J., & Thirlwall, A. P. (2016). Economic growth and the balance-of-payments
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