Slower Than Expected Economic Growth in Australia
The situation has been economically favorable for Australia for a really long time. For the last two decades, economically, this developed country has done reasonably well. Australia has not seen a recession in the recent times and has also weathered the global financial crisis quite effectively. Australia has a small population, vast land area and is part of the developed world as it is a developed economy. It even stayed in positive territory during 2009 when major economies were reporting negative GDP growth. But Australia’s economy is slowing down. The following are some of the reasons why the economy is slowing down in Australia.
Reasons for Economic Slowdown in Australia
• The main pillars of the Australian economy are the service sector, mining sector and exports to major economies of the world. Australia has been a large trading country in the Asia-Pacific region. It has not been in recession for more than 20 years.
• One of the main factors for slowing growth in Australia is China. China is the largest exporter from Australia and also a large import partner of Australia.
• Major exports of Australia include iron-ore, coal, gold and meat among others. China is one of the major exporters from Australia amounting almost 30% of Australia’s exports, while Japan amounts to almost 20% of Australia’s exports.
• China is going through an economic slowdown and Japan is in recession. Export orders from China have dropped in the last few years. Chinese imports from Australia have been largely responsible for the Australian economy being cushioned from the blows of the world economic problems like global recession and other regional financial crises.
• Coal exports to China are likely to be affected due to the change in coal policy in China. Coal is a large part of Australian exports to China and this is likely to have an impact on Australian economy.
• Unemployment rate is steadily rising in Australia over the last few years. This means that more and more people in Australia are unemployed and looking for a job.
The slowdown in economic growth all over the world including China is likely to have an impact on Australia. Also world economy today is reeling under a fear of recession and a very sluggish demand. Sluggish global consumer demand is likely to have an impact on international trade and trade oriented economies like Australia are likely to have an impact. Australia will still do well as an economy but the growth rate is expected to slowdown.