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Economic growth of a nation indicates towards the prosperity of a nation. Economic growth refers as an increase in the production capacity of a nation. An increase in aggregate productivity of a nation is a sign of economic growth of that particular nation. Along with this, if the production competence of a nation increases from one period of time to other period of time; then it indicates towards the economic growth of the nation. Moreover, economic growth is an increase in the market value of the goods as well as services that are produced by an economy eventually. It is measured through the percent rate of increase in real GDP (Gross Domestic Product) of a nation. In other words, it can be said that, economic growth of a nation is calculated as the annual percent change of real GDP. The economic growth rate is the statistical annual rate of growth in gross domestic product.
On the other hand, an increase in real GDP is the actual economic growth of a nation. An increased GDP portrays that there is an increase in the value of national output and spending as well. Economic growth is an important macroeconomic factor that plays an important role to increase standards of living of people and to create new jobs opportunities within nation. Along with this, there are numerous economic factors such as: GDP, employment level, inflation rate, interest rate, economic resources, labor forces, advanced technologies, etc. play a significant role in the positive growth of the economy of a nation. On the other hand, this research essay is useful to portray the economic growth of Australia in previous 3 to 5 years. Moreover, economic factors of nations would also be discussed to demonstrate the economic growth of nation in most recent 3 to 5 years.
The economy of Australia is superior to any other nation in the world. There can be seen a regular increase in the economic growth of the nation. The global financial crisis has influenced the economy of nations in a negative manner. But, the economy of Australia only improved after the global financial growth (Sloman, Norris and Garrett, 2013). Along with this, the gross domestic product (GDP) of nation mainly plays a major role in the economic growth and development of a nation. GDP is a major indicator of the economic growth of the nation. In other words, it can be said that, GDP is one of the most important indicators that is widely used to determine the health of the economy of a country. It is the financial values of all the completed goods as well as services that are created within the borders of a nation in a specific time period. In general, it can be assumed that, Gross GDP is the best way to determine the economic performance as well as position of a country in an effectual and a more significant manner (McLean, 2013).
On the other hand, the GDP value of Australia holds around 2.16 per cent of the economy of the world. Australia is one of the biggest mixed market economy nations in the world. As per the report of Australian Bureau of Statistics, in 2015, the GDP value of Australia is AUD$1.62 trillion. Moreover, the annual GDP rate evaluates and measures the actual economic performance of a nation for a specific time period. The financial crisis of 2007-08 was perilous for the economy of the nations. It influenced the economy and GDP of the nations in a more negative manner (The World Bank Group. 2016). In other words, it can be said that, the financial crisis of 2007-08 declined the GDP growth rate of nations; and consequently affected the economic growth of nations. But, after the financial crisis, the GDP of Australia improved rapidly as compare to other nations. The annual GDP growth rate of Australia was 1.73 per cent in 2009. The improved GDP of nation indicates towards the strong economic position of Australia. The below table portrays the GDP growth rate of Australia in the last 3 to 5 years:
| Year | Australia GDP Growth Rate |
| 2011 | 2.4% |
| 2012 | 3.6% |
| 2013 | 2.4% |
| 2014 | 2.5% |
| 2015 | 2.3% |
| 2016 | 2.8% |
On the premise of the above given data, there can be seen a continuous growth in the GDP rate of nation. The annual GDP growth rate of nation has been increased in the previous years. The increased GDP rate is a sign of strong economic position of nation. After the financial crisis, the GDP rate of nation improved quickly. No other nation has such strong GDP as Australia. Along with this, the below chart is a graphical representation of the GDP rate of the nation (Trading Economics. 2017). The graph portrays a regular increase in the annual GDP growth rate of nation in an effectual and a more comprehensive manner:
On the other hand, Australia and USA mainly contribute in the growth of the world economy. In other words, it can be said that, both these two nations hold most of the proportions of the world economy. But, the GDP rate of Australia is more than the GDP of the USA. The below graph is useful to demonstrate a big difference in the GDP growth of two nations: Australia and USA.
On the premises of the above graph, it is evident that, the GDP rate of Australia rapidly increased after the financial crisis of 2007-08. The annual GDP rate of Australia is more than any other nation of the world. The increased GDP is playing an important role in the economic growth of the nation.
On the other hand, employment rate of a nation also contributes in the economic growth of a nation. It is a measure that determines the extent to which available labor resources are being used in the economy if a nation (Castañeda, Serrani and Sperotti, 2012). High employment rate as well as low unemployment level of a nation plays numerous important roles in the positive economic growth and development of the nation. Australia is a nation which employment rate is high at present times. The employment rate of Australia has been increased in the last 3 to 5 years. In other words, it can be said that, the unemployment rate of Australia has been decreased in recent years. There can be seen a decrease in the unemployment rate of nation in recent years. Recently, the unemployment rate of nation has been decreased as compare to past years. Along with this, as per the report of Australian Bureau of Statistics (ABC), at present times, the unemployment rate of nation declined around 5.7 per cent as of April 2017 (Australian Government. 2015). The below graph is useful to demonstrate the unemployment rate of Australia in previous years:
On the premises of the above graph, it is visible that, the unemployment rate of nation has reached around 5.7 per cent in 2016. The decreased unemployment rate indicates towards the increased employment rate of nation. The increased employment rate show high job growth within the nation. The increased job within the nation is a sign of high productivity. High productivity stands for the positive economic growth as well as development of nation (Thorpe and Leitão, 2014). Along with this, the below graph portrays an increase in the employment rate of nation in an effectual and a proper manner.
In addition to this, inflation rate highly contributes in the positive economic growth as well as development of a nation. High inflation rate indicates towards the negative economy growth of the nation. The main reason behind it is that high inflation rate reduces the purchasing power of money; and declines the productivity as well as profitability of a nation. The decreased productivity and profitability have negative impact on the economic growth and development of the nation. High inflation rate does not work in the favor of the growth of the economy. It is because of high inflation rate increases the prices of produced goods and services within nation. The domestic buyers do not shoe their interests to buy these high priced goods and services to meet their daily requirements (Abbas, Bouhga-Hagbe, Fatás, Mauro and Velloso, 2011). So, high inflation rate only declines the economic growth rate of a nation.
Apart from this, low inflation rate contributes in the positive economic growth and development of a nation. It is because of the purchasing power of a nation increases if inflation rate is low of a nation. The low inflation rate improves the productivity of nations. The inflation rate of Australia has declined in previous years. There can be seen a regular decrease in the inflation rate of nation in past two or three years (Helpman, Itskhoki and Redding, 2010). Moreover, the below graph is useful to demonstrate a decrease in the inflation rate of nation in past years:
On the basis of the above graph, it is visible that there is a decrease in the inflation rate of Australian in past 2 to 3 years. As per the report of Australian Bureau of Statistics, in 2016, the annual inflation rate of nation is recorded the lowest inflation rate in past nineteen years. This can be considered a radical decrease in the inflation rate of nation; that had never seen in the history of any other country (Palmer, 2017). This way, it can be assumed that, the annual GDP rate, employment rate, unemployment rate, and inflation rate of Australia played an important role in the economic growth and development of the nation in recent years. There can be seen a significant changes in these above rates; and these changes are still required for the continuous economic growth as well as development of the nation in upcoming years.
On the other hand, the annual interest rate of a nation plays a significant role in the economic growth of a nation. It is one of the key macroeconomic variables, which is directly connected to the economic growth and development of a nation. A high interest rate is a sign of low economic growth of a nation. It is because of an increased interest rate forces to consumers to pay more money to finance their consumption. These high payments reduce the interests of consumers; and they do not buy goods at high prices that reduce the level of consumption (Endegnanew, Turner-Jones and Yartey, 2012). Moreover, higher interest rates discourage firms to do investments in the economy of the nation. In other words, it can be assumed that, when interest rates rise then investments go down. The decreased consumption and investments is a sign of the negative economic growth of a country. But, the interest rate of Australia highly contributes in the economic growth of the nation. There can be seen a decrease in the interest rate of Australia in last 3 to 5 years. The below graph is useful to show a regular decrease in the annual interest rate of nation:
On the premise of the above graph, it is clear that, the decreased interest rate improve the consumption level within nation. There can be seen an increase in the investments because of people have to pay lower interest rates for their financed equipment and machinery. The decreased interest rates encourage the consumers to purchase more durable commodities at low prices, which improve consumption level within nation (ABC. 2017). The increased consumption and investments highly contributed in the positive economic growth as well as development of Australian in past three to five years.
In addition to this, the fiscal and monetary policy of Australia plays an important role in the economic growth of the nation. The major aim of the Australian fiscal policy is only to improve the economic performance and position of the nation (Weber, 2012). Moreover, due to its fiscal policy, Australia has entered in the 26th year of constant economic growth and development of nation. The economic growth of nation did not decrease into recession. It is well known that the global financial crisis of 2008 has influenced the economies of most of the nations in a negative manner. The real GDP of Australia is rising by 3.3 per cent per annum, which is faster than any other nation in the world. Along with this, the fiscal policy of Australia contributes in the welfare of population and long term growth of the economy of the nation. Fiscal policy plays an important role to mitigate the fluctuations that exist within the economy of a nation. The fiscal policy of nation has numerous positive effects on the macroeconomic conditions of nation (Lin, Edvinsson, Chen and Beding, 2013).
On the other hand, with the help of the fiscal policy, the regulators of nation make their possible efforts to control inflation & interest rates, improve employment rates, and stabilize business cycles in order to improve the economy performance of nation all around the world. Through fiscal policy, regulators endeavor to adjust tax rates as well as government spending for the positive economic growth and development of nation. Moreover, the Australian monetary policy improved the economic growth of nation in recent years. The Reserve Bank of Australia builds effective monetary policy to determine the appropriate interest rates to raise the investment opportunities within nation. A proper interest rate improves the consumptions as well as investments; and controls the inflation rate of nation in an effectual and a more comprehensive manner (Di Giovanni and Shambaugh, 2008). As a consequence, it can be believed that, the fiscal and monetary policy of Australia has enhanced the economic growth as well as performance of nation in past few years.
In the same manner, government spending has contributed in the economic growth of Australia in last 3 to 5 years. Government spending of a nation plays an important role in the welfare of populace and growth of the economy of nation. The Australian government is very much aware for the welfare of its populace. It spends a huge portion of money for the welfare of people. The below diagram is useful to portray the Australian government spending in an appropriate manner.
On the premise of the above diagram, it is clear that, the Australian government spends too much money on social welfare, infrastructure, transport, education, health, etc. These high spending improve the productivity, profitability, and employment level of nation. Along with this, According to the report of Australian Bureau of Statistics, government spending of Australia has increased continuously in recent years. The below graph is helpful to show the continuous increased government spending of nation.
On the basis of the above graph, there can be seen a regular increase in the government spending in Australia. In 2016, the Australian government spending has increased from the spending of 2015. Moreover, the government spending in the fourth quarter of 2016 can be measured an all time high spending of nation. This way, it can be assumed that, government spending in Australia has increased in recent years. These increased government spending highly contributed in the economic growth and development of nation in last three to five years (Focus Economics. 2016). In this way, by considering all these economics factors, it can be believed that, the economy growth and performance of Australia highly improved in recent years. The Australian governments and regulators are playing numerous important roles in the positive economic growth as well as development of nation. They are equally focusing on all the economic factors that influence the economy of a nation in either a positive or a negative manner. Along with this, the reserve bank of Australia is also playing an important role in the economic growth of the nation. It manages and controls the interest rates and inflation rates those improve the economy of nation in an effectual and an appropriate manner (ABC. 2017). In this way, there is an effective balance in all the economic factors of nation; and the balance is essential for the economic growth and development of a nation in the world.
On the premises of the above analysis, it can be said that, the economy of Australia has been extremely improved in recent years. GDP, employment rate, inflation rate, interest rate, fiscal & monetary policy, government spending, unemployment rate, exchange rate, and so on are the major economic factors that highly contributed in the economic growth of Australia in last 3 to 5 years. Along with this, it is also observed that, the government of nation is making all its possible efforts to improve the consumption level; so that the production level of nation may increase rapidly. The government of nation has declined the interest rates to improve the investment opportunities; and attract more and more investors for the economic growth of nation. The decreased interest rates as well as inflation rates have improved the productivity and profitability of nation. Due to the high increased profitability, the government has increased its spending on the welfare of populace, education, health, infrastructure, technology, and long term economy growth of the nation. On the whole, it can be assumed that, the economic growth as well as development of Australia has been highly improved in last 3 to 5 years.
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