Question

Use the national macroeconomic variables such as GDP growth, inflation, exchange rate
and cash rate as the basis for describing the Australian economy over the last three years
using quarterly or monthly data, and its likely development. This will be assessed according
to both data acquisition and analytical capacity

Answer 1

Australia - GDP

Australian gross domestic product (GDP) is the most important measure with which to evaluate the performance of Australia’s economy. The Australian Bureau of Statistics (ABS) publishes GDP figures on an annual and quarterly basis. The table below shows the change of price-adjusted GDP for Australia, typically referred to as Australia’s economic growth rate. A more complete assessment of Australia’s GDP can be found below.

Australia - GDP Data

	2015	2016	2017	2018	2019
Economic Growth (GDP, annual variation in %)	2.3	2.8	2.5	2.8	1.8

Australia GDP Chart

Note: Annual variation of gross domestic product (GDP) in %.
Source: Australia Bureau of Statistics and FocusEconomics calculations.

Overview

Gross domestic product (GDP) measures the economic performance of a country over a given period, typically a year or a quarter. It is therefore the most important economic indicator to evaluate the country’s economy (see our GDP page for more information on this indicator).

Australian GDP Growth Performance

Australia gdp growth rate for 2019 was 1.90%, a 1.04% decline from 2018.

Australia gdp growth rate for 2018 was 2.94%, a 0.57% increase from 2017.

Australia gdp growth rate for 2017 was 2.37%, a 0.4% decline from 2016.

Australia gdp growth rate for 2016 was 2.77%, a 0.58% increase from 2015.

Structure of Australian Gross Domestic Product

The increase in demand for raw commodities from emerging countries since the early 2000s, which led to a strong rise in global commodity prices, has played a very important role in the dynamics of the Australian economy. Along with higher terms of trade, which sparked a substantial rise in the purchasing power of households, the rise in commodity prices caused a boom in mining investment, particularly coal and iron. Mining investment, hence, has been one of the main drivers of Australian growth during the last 3 years. The Australian economy is now in transition from the investment phase of the mining boom to the production phase. The expansion in production capacity for iron and coal has already had a strong positive effect on Australia’s exports to the Asian market. The mining sector, together with the financial sector and related professional and scientific services have markedly increased in importance in Australia’s GDP over the course of the last 5 years. In contrast, manufacturing output has seen its share steadily shrinking. As a result, around three-quarters of the economy now involves mining and the production of services rather than goods, with the financial sector replacing manufacturing as the largest single industry in the economy. Also Australia is facing recession amid pandemic in 2020. This year the growth rate became negative since last 27 years. So the economy is not performing well, according to the second quarter data of 2020.

When are Australian GDP Data Released?
The Australian Bureau of Statistics publishes GDP data on a quarterly and annual basis. Annual GDP data for Australia are released each year in November. Quarterly GDP readings are released two months after the end of the quarter, i.e. at the beginning of March, June, September and December. Quarterly GDP data are published along with a press release in which the Australian Bureau of Statistics provides an analysis of the results. The press release is available on the government website
along with a calendar of the upcoming releases.

How Accurate are Australian GDP Numbers?

The Australian Bureau of Statistics acknowledges the accuracy issue of quarterly GDP estimates. According to ABS, the quarter-on-quarter growth in seasonally adjusted terms is very sensitive to the timing of recording a transaction. If the recording of a transaction is delayed by one quarter, seasonally-adjusted movements will be distorted for three consecutive quarters. In addition, the majority of the estimates in the quarterly national accounts are based on partial indicators. Usually there are differences in concept and scope between the national accounts series and the relevant partial indicator. To improve accuracy, the ABS is constantly revising its figures whenever more complete and accurate information becomes available. Press releases include specific information on which data have been revised.

Overview

The Australian economy was already weak before the coronavirus crisis hit.

Growth was weak – last year, the country fell into in a “per capita recession” because economic growth was less than the increase in population – and since the end of the mining boom wages have been moribund, rising just 2.1% in the year to the end of March.

Inequality has increased since the early 90s, according to Australian Bureau of Statistics data compiled by the government’s in-house thinktank, the Productivity Commission.

So far, a conservative Coalition government has given no hint it wants to address these problems. Instead, much of the talk coming from the national capital, Canberra, has involved painting ideas such as cutting corporate regulation and reducing the power of Australia’s already-struggling union movement as solutions to the economic crisis.

Despite a historic aversion to deficit spending, the ruling Liberal-National Coalition has so far pledged a total of more than $130bn – more than 10% of the Australian economy – to keep things going through the shutdown.

Gross domestic product (GDP) shrank 7% in the April-to-June quarter compared to the previous three months.

This is the biggest fall since records began back in 1959 and comes after a fall of 0.3% in the first quarter.

An economy is considered to be in recession if it sees two consecutive quarters of negative growth.

Australia was the only major economy to avoid a recession during the 2008 global financial crisis - mainly due to demand from China for its natural resources.

At the start of this year, the economy was hit by falling economic growth due to an extreme bush fire season and the early stages of the coronavirus outbreak.

Inflation

Inflation rate compared to previous year
2020*	1.43%
2019	1.61%
2018	1.93%
2017	1.97%

Inflation declined due to the low demand for the products.

Exchange rates

AUD USD - Historical Annual Data
Year	Average Closing Price	Year Open	Year High	Year Low	Year Close	Annual % Change
2020	0.68	0.70	0.74	0.57	0.71	0.93%
2019	0.70	0.70	0.73	0.67	0.70	-0.34%
2018	0.75	0.78	0.81	0.70	0.70	-9.85%
2017	0.77	0.72	0.81	0.72	0.78	8.34%

Australia's Exchange Rate

An exchange rate is the cost of a country's currency in terms of another currency.

Australia's rate is a floating exchange rate, which means that the actual rate is not set by the government. The rate is determined by market forces, and it fluctuates constantly.