Question

In: Economics

Consider the world around you, including political, economic and financial considerations. What is the largest risk...

Consider the world around you, including political, economic and financial considerations. What is the largest risk you perceive to the stability and growth of the Australian economy into the future? Why? [200-250 words] if you could just give me some pointers that'd be awesome!

Solutions

Expert Solution

Australia is one of the countries which has huge natural resources and comparatively lower population. It has vast land and coastline and very rich in minerals and metals.
In recent years, Australia has gone through some political instability but that is not really a cause of concern because it has neither experienced any decision making paralysis nor any disruption on the economic front.
A fellow Anglo-Saxon country, New Zealand as the neighbor and no other powerful hostile country is quite beneficial to Australia.

Australia has huge land but lower population means it is not a big manufacturing hub and its economy has relied mostly on mining and exporting. It has some biggest companies operating there for Uranium, Gold and for other metals. However, its biggest consumer is China which has huge needs for resources. However, China has been struggling with its economy and slower demand recovery from China because overall cooling down of the world economy has concerned Australia.
Along with that, the recent trade war between the US and China could also affect the Australian economy.

Just like other countries experienced an uplift in the housing market in the boom period of the economy, Australia has also witnessed strong growth in the housing sector. However, there are signs now that it might turn out to be an asset bubble.
Immigration policy changes which have lowered the number of migrants means there will be a lower demand for housing.

Another big risk is an environmental risk. Australia and New Zealand are much more prone to climate change and global warming considering their geographical location and local industries.


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