Ayesha Surrounded, by the Indian and Pacific Oceans, Australia is the 6 th largest country by total area. Australia is the world’s smallest continent, but is also the world’s largest island. Australia became an independent nation on January 1, 1901. The British Parliament passed legislation allowing the six Australian colonies to govern in their own right as part of the Commonwealth of Australia. The Commonwealth of Australia was established as a Constitutional Monarchy. ‘Constitutional’ because the Commonwealth Government was established with a written constitution, and ‘Monarchy’ because Australia's Head of State was Queen Victoria. PPP (Purchasing Power Parity): An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power. PPP is calculated as: S = P¹ / P² Where: "S" represents exchange rate of currency 1 to currency 2 "P1" represents the cost of good "x" in currency 1 "P2" represents the cost of good "x" in currency 2 In other words, the exchange rate adjusts so that an identical good in two different countries has the same price when expressed in the same currency. For example, a chocolate bar that sells for C$1.50 in a Canadian city should cost US$1.00 in a U.S. city when the exchange rate between Canada and the U.S. is 1.50 USD/CDN. (Both chocolate bars cost US$1.00.)
Ayesha Most of the continent is desert or semi-desert and has limited agricultural value. Consequently, Australia is one of the world's most urbanized countries, with 89% of its population living in large cities. Australia’s population of 22.5 million makes it the 51 st most populous country on Earth. GDP per capita : $54,869 It has a low unemployment rate and a high literacy rate. At 81 years of age, the average life expectancy in Australia is among the highest in the world. Average median age is around 37.5 years Approximately 26% of the people living in Australia are immigrants. Australia is home to citizens from some 200 countries, and with over 4 million citizens who speak a second language. has the most multilingual workforce in the Asia–Pacific region. Potential workforce: The potential workforce is the number of people in the population of workforce age, which is conventionally defined as 15-64 years old. The actual workforce will depend on the proportion of people aged between 15-64 years that seek to actively participate in the workforce and those 65 and over who continue to work. PPP (Purchasing Power Parity): An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Geneva Government Economic management style, degree of government control and how it is asserted such as public ownership of businesses, subsidies, tax policies and monetary policy Effectiveness of Australia’s attempts to manage its economy History of government actions that have applied to the economy over the past 5 years. Significant economic data: governmental expenditures and revenues
Geneva Government Australia is a Free market economic system. The 4 main components of the Australian economic system are trade, manufacturing, services and finance. • Australia has Sound and practical structure of financial regulations and institutions. • Low barriers to trade and investment open to investment without unnecessary delay.. • A new business can be established in Australia within two days compared with an OECD average of 20 days. • The goods and services tax (GST) – Australia’s value‐added tax – is charged at 10% and applies to almost all goods and services transactions across the economy. • There is a flat corporate tax rate of 30%.
Geneva Having a stable political framework makes Australia a safe place for investment. According to IMD World Competitiveness Yearbook of 2010, Australia ranks 3 rd in the world for political stability. This is within a range of 0 being very high and 10 very low. Notice that, by comparison, Canada is ranked No. 8 and New Zealand is No. 12.
Geneva The common forms of business enterprise in Australia are: Partnerships Joint ventures, Trusts, Companies, Sole traders A company is considered to be resident for taxation purposes: If It is incorporated in Australia, or if it carries on business there and both central mgmt and control are located there. or its voting power is controlled by shareholders who are Australian residents. Taxable Australian assets generally include: Assets used by the non-resident to carry on business in Australia . Real estate located in the country. Interests in resident partnerships, trusts, or private companies. Shareholdings of more than 10% in resident public companies.
Geneva In regard to Government Revenues, the key points of interest reported in this revenue statement include: Total Revenue $322 Billion, which is 23% of GDP.
Geneva In reference to Estimates of General Government Sector Expenses, Total Expenses were $355 Billion, which is 25% of GDP. General Government Sector Expenses are expected to increase slowly in real terms in 2010‑11 and across the forward years.
Geneva This table provides a line item depiction of Budgeted government sector expenses by function for periods 2009‑10 to 2013‑14. For ease of review, this same data is depicted in pie chart form. Mid‑Year Economic and Fiscal Outlook 2009‑10 (MYEFO)
Geneva % of Government Budget by Function The largest portion of Australia’s budget goes to Social Security & Welfare at 32%. Other Purposes - Includes expenses incurred in servicing public debt interest, assistance to State, Territory and local governments, natural disaster relief, the contingency reserve, and expenses related to interest on public service and military benefits. The noteworthy expenditures include Health at 16%, Education 9% and Defense only 6%. Additionally, 9% of the budget is allocated to Fuel and Energy, Housing & Community Amenities, Transport & Communication, Public Order & Safety, Agriculture, Forestry & Fishing, Recreation and Culture, Mining, Manufacturing & Construction.
Yaw Economy
Yaw The growth of the Australian economy began in the middle of the 19th century with the wool industry and the gold rush. The gold rush was also responsible for the first significant population growth of the country. The second phase of economic boom began during the World War II and continued until 1970. At the beginning of the new millennium, a new improved tax system was started which was favorable to both individuals and businesses. In the beginning of the 21 st century the Australian government further reformed its economy. In October 2009, the Central Bank raised its key rate, making Australia the first G20 country to constrict its monetary policy. The unemployment rate in this country speaks for its developing economy as 11% unemployment rate in 1992 has come down to just 5%.
Yaw Australia, is marked by a Stable/Competitive Economy. In June 2008, Australia recorded 17 consecutive years of economic growth since 1992 – averaging 3.3% a year. This places Australia in the top echelon of developed countries in terms of sustained rates of growth. Relatively unaffected by global recession, Australia ranks 1 st in the Asia‐Pacific region for labor, agricultural and industrial productivity per person employed, according to the IMD World Competitiveness Yearbook. Strong Economic Management : Australia’s positive outlook is also sustained by its strong fiscal position. Net Government debt was eliminated in 2005‐06 making Australia a net creditor nation. In 2010, the Australian Government reported a budget surplus equivalent to 3.5% of GDP – approximately $41.6 billion (2010 GDP = $1.2 Trillion). Exports are strong.
Yaw With a relatively high-growth and low-inflation economy supported by robust political and economic institutions, and an internationally competitive business sector, Australia now ranks as the 14th largest economy in the world (by GDP), and the 4th largest in the Asia Pacific region. Australia has become an attractive investment destination for global investors as well as home to many major multinational financial services providers. With a diverse investor group comprised of 40% foreign investors, 40% domestic institutional investors and 20% retail investors, the Australian equity market is well placed in the global economy.
Yaw In the 20 th Century, it could be strongly argued that Australia’s economic success was based on its abundant agricultural and later mineral and fuels resources. While these sectors are still important, Australia has increasingly become a knowledge-based economy. Numerous factors have contributed to this development: the pace of technological and social change; advances in transport making travel, and the exchange of ideas, easier; and broader access to higher standards of education. Information and communications technology (ICT) is a key driver of economic growth, and continuing expansion of ICT infrastructure is essential to keep pace with world standards. Australia’s ICT market is worth an estimated $89 billion with 25,000 companies employing 236,000 IT specialists. Australia is ranked the 9 th among the world’s most e-ready Digital Economies in a joint report conducted by IBM and The Economist.
Yaw The standard of living of Australia has risen significantly in the last fifteen years, and this country is among the top 5 developed countries of the world. A 2006 survey noted that living standards in Australia surpass those of all Group of Eight countries except the United States. Note : The G20 replaced the G8 on September 25, 2009. Australia has one of the highest percentages of shareholders in the world More than 50% of the adult population own shares in publicly‐listed companies This has led the Aussies to be considered more investor savvy than most other nations. Aussies have the ability to buy and invest with confidence. PPP = Purchasing Power Parity (per capita)
Yaw Strong Economic Management : Australia’s positive outlook is also sustained by its strong fiscal position. Australia’s independent central bank, the Reserve Bank of Australia (RBA), is responsible for monetary policy, in particular to keep consumer price inflation between two and three%, on average, over business cycles. The Macroeconomic objectives of the Australian Government are: full employment, price stability, external balance and economic growth. To fulfill these objectives the government use 2 main policies: 1. Fiscal policy which deals with the commonwealth's plans and actions to influence economic activity though taxation and Government spending. 2. Monetary policy. Its purpose is to increase or decrease aggregate demand (AD) depending on the economic activity and to manage inflation.
Yaw Financial markets : • Australia is a major regional financial center and a vital cog in the global financial system. • The Australian Stock Exchange and the Sydney Futures Exchange merged in 2006 to form, the Australian Securities Exchange (ASX), the world’s 8 th largest exchange. • As of October 2010, the ASX had 2,192 listed companies with a domestic market capitalization of $1.4 trillion. 150,000 equities and 400,000 futures and options are traded daily. • Australia’s trading day spans the closure of the markets in the United States and the opening of markets in Europe. • The ASX also has strong links with the major stock markets of Asia. Notable: The ASX, is set to lose its monopoly on operating a stock market in Australia in 2011, and an affiliate of Chi-X Europe is planning to set up a trading system once the monopoly is abolished. Singapore, meanwhile, has long lagged behind Hong Kong and Tokyo as a regional financial center, and made an $8.3 billion purchase offer to the ASX in October 2010.
Yaw Trade Practices
Yaw Overall detailed view of trade metrics of Australia: 42% of Australia’s trade is with China and Japan. 38% of goods imported to Australia are from China, the U.S. and Japan.
Yaw The Australian Government supports the negotiation of comprehensive Free Trade Agreements (FTAs) that are consistent with the World Trade Organization rules and guidelines and which complement and reinforce the multilateral trading system.
Yaw Australia Balance of Trade: Australia reported a trade surplus equivalent to A$2.6 Billion in October of 2010. Rich in natural resources, Australia is a major exporter of agricultural products, particularly wheat and wool, minerals such as iron-ore and gold, and energy in the form of liquefied natural gas and coal. Australia is a major importer of machinery and transport equipment, computers and office machines and telecommunication lasers. Its main trading partners are: Japan, China, The United States and New Zealand.
Ayesha Economic Indicators Significant economic data: balance of payments, inflation rate, interest rates, average per capita income, governmental expenditures and revenues, major and burgeoning industries, major imports/exports, etc.
Ayesha Interesting economic activity that occurred during that period of time due to recession. Relative to other countries Australia has been performing really well. (a) All recent data subject to revision; (b) IMF forecast; [c] PPP is purchasing power parity; (d) Total may not add due to rounding; (e) Merchandize trade; (f) Excludes imports of aircraft after September 2008. np Data not published. .. Data not meaningful. PPP (Purchasing Power Parity): An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power. PPP is calculated as: S = P¹ / P² Where: "S" represents exchange rate of currency 1 to currency 2 "P1" represents the cost of good "x" in currency 1 "P2" represents the cost of good "x" in currency 2 In other words, the exchange rate adjusts so that an identical good in two different countries has the same price when expressed in the same currency. For example, a chocolate bar that sells for C$1.50 in a Canadian city should cost US$1.00 in a U.S. city when the exchange rate between Canada and the U.S. is 1.50 USD/CDN. (Both chocolate bars cost US$1.00.)
Ayesha Australia GDP Annual Growth Rate: Australia’s economy expanded 2.7 in the third quarter of 2010, as measured by the year-over-year change in Gross Domestic Product (GDP YoY). Unlike the commonly used quarterly GDP growth rate the annual GDP growth rate takes into account a full year of economic activity, thus avoiding the need to make any type of seasonal adjustment. Australia’s Gross Domestic Product is worth 1.2 trillion dollars. From 1960 until 2010, Australia's average annual GDP Growth was 3.4% reaching an historical high of 9.00% in 1964 and a record low of -3.40% in 1983.
Ayesha Australia Inflation Rate: The inflation rate in Australia was last reported at 3.10% in June of 2010. From 1937 until 2010, the average inflation rate in Australia was 6.02% reaching an historical high of 17.60% in March of 1975 and a record low of -0.30% in September of 1997. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. Canada Inflation Rate: The inflation rate in Canada was last reported at 2% in November of 2010. From 1915 until 2010, the average inflation rate in Canada was 3.26% reaching an historical high of 21.60% in June of 1920 and a record low of -17.80% in June of 1921. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. New Zealand Inflation Rate: The inflation rate in New Zealand was last reported at 1.50% in the third quarter of 2010. From 1915 until 2010, the average inflation rate in New Zealand was 4.67% reaching an historical high of 44.00% in September of 1918 and a record low of -100.00% in June of 1915. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy.
Geneva Comparison: Canada & New Zealand Next we will see how Australia performed in comparison to Canada and New Zealand.
Geneva W ith respect to comparing Australia to Canada and New Zealand , the following demographic statistics were highlighted: Population , Median Age , Birth Rate , Death Rate and Life Expectancy . Population - Australia: 22 million; Canada, 24 million; New Zealand: 4.3 million Median Age: Australians: 38 years; Canadians: 36; New Zealanders: 41 Birth Rate - Australia: 12 per 1000; Canada: 10 per 1000; New Zealand: 14 per 1000 Death Rate - Australia: 8 per 1000; Canada: 7 per 1000; New Zealand: 7 per 1000 Life Expectancy - Australia: 82 years; Canada: 81 years; New Zealand: 80 years
Geneva Geneva Australia’s economy expanded 1.2% in 2010, while Canada and New Zealand contracted. Australia’s inflation rate was lightly higher than that of Canada or Newland in 2010. As far as the jobless rate, Australia's was 5.2%., lower than either Canada or New Zealand Over Australia has a stronger economy than either Canada or New Zealand and it is ranked third for political stability and 4 among Asian Pacific nations for strong economy. GDP Growth Rate -2010: Australia’s economy expanded 1.2% in 2010, while Canada and New Zealand contracted. Canada’s economy contracted 2.5% in 2010. New Zealand’s economy contracted - 1.7% in 2010. I Inflation Rate in 2010: Australia’s inflation rate is slightly higher than that of Canada or Newland Australia’s was last reported at 3.10% in June of 2010. Canada’s was last reported at 2% in November of 2010. New Zealand’s was last reported at 1.50% in the third quarter of 2010. Joblessness in 2010: Australia's was 5.2%., lower than either Canada or New Zealand. So over all Australia has the strongest economy of the two.
All Some of the key contributing factors to Australia’s strong economic performance were demand for commodities, growing ties with China, low inflation, a housing market boom and strong emphasis on reforms. High export prices for agricultural products, energy and raw materials provide steady and growing foreign exchange income, leading to increasing business and consumer confidence gave a boost to the national economy. The mining sector in particular notched up huge growth numbers. During mid-2008, growth was constrained due to a tight labor market and infrastructure bottlenecks. The trade deficit went up because of strong import demand, a drought and a strong currency. However, the country managed to somewhat escape the Great Recession, which many other developed economies could not. The country’s strong banking sector, monetary and fiscal stimulus, investment from China and sharp buoyant export demand acted as protective factors. Some of the major plans for 2010 economic development include raising economic productivity, passing emissions trading legislation and furthering economic relations with China. The Government also plans to focus assistance for drought, devastating bush-fires and natural disaster related issues. Despite high global demand for Australian mineral commodities, export growth has remained flat in comparison to strong import growth. Even though Australia enjoys high commodity prices, economists have warned that structural change is needed in order to increase the size of manufacturing sector.