Economic Analysis

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 World economies have been found to work in utter coordination with the least knowledge and plan for this coordination. Most of the economies through the world will always be influenced by the unfolding in the world economies replete of the existence of direct trade or integration. Australia has equally been prone to this economic dynamics with hardships and triumphs in the world economies eating into its economic trend. It is for this reason that economists try to apply models to determine the effects of the global economy and the domestic economy.

                        The aforementioned has been very incidental in the determination trends within the global economy and state economies. Trends in the economic performance of economies have been varying dependent on non economic factors. This shows the dynamism of the economic performance replete of direct economic factors but subject to other factors. The terrorist bombing of September 11 affected world economies beside the individual economy of the United States.

The outbreak of the severe acute respiratory syndrome (SARS) virus affected the business trends of the world because some of the integration had to be curtailed by the policies development consequent to the outbreak. Consequently the levels of trade activities with some countries were reduced because of the fears of contracting or spreading the virus.

            These factors have impacted largely on the investment, business and the economic prospects of the economies across the world. The uncertainties that have been prompted in by these unfolding normally influence the consumption behaviour of most of the consumers and thereby influencing the consumption trend and the economy as macro units. Because of the non economic factors, the global GDP had to drop in 2003 by a 0.3% point.

The war in Iraq affected the economic performances in most of the industrialised countries. Industrial production in most countries stagnated coupled with the fallout precipitated by the bursting prompted in the equity markets. According to the International Monetary fund, if economic recovery has t be achieved through the world, then the recovery has to be spearheaded by the United States of America. This shows that independent economies will largely depend on the word economic trend.

  The period of the war in Iraq and the upsurge of the SARS had a lot mixed signs. The financials markets of Australia had fluctuating trends that were not a health indicator for the Australian economy. Though equity markets were steadier, however any salient projection needed to take cognisance of the trends within the United States economy. The strength of the dollar deteriorated implying that the sales were to drop consequent to this dollar value.

  The turnaround in the global economy prompted by the strengthening equity markets saw the Australian economy start getting back to the right trend. The increase in the equity markets in the United Kingdom and that in Japan stimulated the Australian economy to get back on track. However, the performance of the Australian market was dependent largely on the interest rates in the larger economies of the world including the United States, the United Kingdom and the Japanese economies. This was expected to transfer to the equity markets funds from the bond markets.

After the 1997 global economic slowdown, which was prompted by the Asian crisis, the Australians economy was affected so much that the government had to review the then economic policies. Overall world exports stood at 12.5 point but slowed down to 9.12% in the year 2000 after the September 11th bombing in the United States of America. At the same time the Australian economy was growing at 10.2%but subsequently dropped to 7.4%after the twin tower bombing in the United States of America.

 The volumes of the world exports stood at 7.7% per annum in 2000 but the level dropped considerably after the September bombing to 5.2%. On its part the Australian economy’s exports were reduced to 8.0% from 11%; this shows that the global economy can not be divorced from the individual state economies. The world trade has always been dominated by developed state hence implying that whatever affects the developed nations will always truckle down to affect the developing and the less developed.

The economic growth of the world has largely impacted on the Australian economic development prospects. According to economists, the Australian economy has been growing at one of the fastest rates in the world particularly compared to the economies of Europe, Japan and the USA. Because of the shrinking world economy, rural exports of the Australia have considerably dropped.

The weak world economy ha equally affected the exports of services in Australia. Services such as transport and have assisted the Australian economy remain median despite the dwindling global economic performance. Besides, the threat for international terrorism affected the Australian economy because travel rates went low due reduced demand for travelling arising from the fears.

The overall impact of globalisation has been that state economic development has been made a global affair. These trends have had a considerable effect on the economy of Australia through the effect it has had on the trade volume of Australia. The money market has also been largely impacted by the globalisation of trade. The exchange rate of Australia is largely dependent on the amount of integration with the international community which is affected by the other factors such as tourism and travel. A large proportion of the international exchange rarely does with the payments for goods and services, but transfer payment.

Currencies are rated based on the international currencies and the exchange rates thereto. The trends and unfolding in the international arena always affects the rate of exchange for the local currency against the international currencies. It is this rate that determines the economic performance of the local currency. The interest rates of any economy depend on the currency, commodity derivatives and the equities. An estimated rate of 75% accounts for the Australian turn over in form of swaps, forward rates and options.  Without the integration with the international community, the accessing foreign currencies become curtailed and in short supply. Consequently, the

                        During the years between 2001 and 2004 was robust changing strongly against the British pound, the Japanese yen and the American dollar. Its is the strengthening of the Australian dollar against the American dollar that makes the American dollar appear weak within the international trade.

                        The Australian economy at the time also strengthened because of the increasing demand for the Australian dollar at the time. Japanese investors have had a lot of interest in the Australian economy. The overseas demand for the Australian dollars has always been seen as a positive indicator in the performance of the Australian economy. It is with respect to this analogy the international economy and the state economies can not be looked at in isolation.

                        The projections in the international trade and bilateral dealings equally determine the projections of individual economies. The interest rate differential coupled with the future expectation of economies on the international scale plays a critical role in the determination of the path that an economy would trail. Intrinsic tendencies of foreign economies also have a very critical role in the determination of the prospects of any economy. There has also been increasing volatility with fund manager attempting to maximise profits despite the changes in the currencies values and interest rates.

                        Most countries have had to import requirement. Because oil is one of the core international commodities the international community has the least it can do in relation to controlling the trade that depends on this commodity. In 2003 for example Australia would not outperform the OECD as was the case in 2002. Australia had not enjoyed the competitive advantage that it used to enjoy earlier. Over the years the Australia had enjoyed a competitive advantage over countries such as the USA, the UK and Japan.

                        The lags in the international economic performance are of paramount importance in the determination of the probable domestic trend. The most requisite trend for the Australia would be slow but very steady global economic trend. In 2008 the economic growth of Australia was at 2.6% which has been projected to be largely dependent on the trends in the international economic trends. Though Australia boasts of being the 17th country terms of GDP, turmoils in the economic performance globally will always dictate this stability.

                        In 2008 export trade was contributing to estimated $21.9 billions. This would be affected considerably with the instability in the global economy. Australia had imports at the same time valued at 22.8 billions which implies that Australia was equally engaged to the world and the world was engaged with it. Consequently any instability in the global economy would affect these transactions and affect the Australian trade.

                        The Australian economy has been performing well that has been prompted by very efficient banking system. The efficacy within the banking system has been able to assist the Australian economy remain on track despite the tides in the world economy. While the mining sector has put Australia on the world map except that if the world can not receive this minerals then the returns from this efforts would be worthless. In 2008, the global crisis affected the mining sector tremendously.

The drop in the demand for the Australian minerals impacts on the employment prospects of the Australian populace which are largely absorbed in the mining sector. The cost of living has gone up min Australia resulting from the high inflations that has been prompted by the increasing food prices and service.

Australia gets most of its manufactured products from foreign countries. The international policies have always had a critical role in the shaping of various economies across the world. The International Monetary Fund and the World Bank have always had a critical role in the strategising of economies. This has always been done the development of conditionalities that are meant to give directions on the development of economic strategies.