Changes in Australian key Economic Variables
Changes in Australian key Economic Variables After Trump being Elected
“Business Report”
Dear writer,
This assignment is a group based report. I want you please to write about a certain part only within this report. The assignment description in general is as follows:
“Donald Trump has been elected President of the United States, which has created a lot of uncertainty in the global economy’. The senior management team have asked you to provide a business report assessing Australia’s key economic variables that drive the Australian economy and forecasting it’s growth for the next 6 months. Use the key macroeconomic indicators to support your argument. Based on your forecast, the senior management team would also like you to advise how the central bank may alter the cash rate movement”
That was the topic in general as a group report. Within that concept I want you please to write a 2 pages (500 words) about my part in this report.
My part must be discussed ONLY the changes on key economic variables that drive the Australian economy and forecasting it’s growth for the next 6 months (the first 6 month under Trump administration)
The Key Economic Variables are as follow:
- Consumption (C)
- Investment (I)
- Government Expenditure (G)
- Export & Import (X & M)
Also, need to bring in the Key Macro Indicators: GDP growth, unemployment & Inflation when forecasting the cash rate movements (IMPORTANT)
NOTES
- As mentioned earlier, the writer must write about my part only as specified above. Therefore, No Summary, No introduction, No conclusions are required.
- References are required within the text and as a list
Expert Solution
Investment
Investors have begun to eye Australia prompted by the uncertainty and backlash surrounding Donald Trump’s administration. The Australian property market has started experiencing a spur in demand from overseas. Investors in view that the nation is secure for any form of investment. For instance, the Chinese nationals being among the major investors in the foreign real estate are showing interest in investing in the country. The move is triggered by Trump’s policy that would raise tariffs on imported goods from China to around 45 percent alongside tightening existing trade agreements. It has made potential investors, especially from Asia to consider investing in Australia. Investment is perceived to be a critical avenue to economic growth and development (Oosterbaan, 2000, p. 56). In six months time, there will be a significant increase in Asian and Chinese investment into Australia because of Trump’s strict administration. However, it is challenging to estimate the exact magnitude and scale of growth regarding the nation’s GDP. Nevertheless, it is expected to grow between the margins of 0.5-1.0 percent in the short term of six months.
Export and Import
It features both positives and negatives for the country’s economy. For a long time, Australia has been a significant exporter of commodities such as Iron and Coal to the US hence gaining immense benefits from the transactions. Donald Trump promised a new wave regarding spending on infrastructure in the US thus could raise the demand for raw products and result in high prices. The nation is also likely to benefit from expanded spending on infrastructure in Asia. Various Trump policies advocate for reduced global trade which poses a significant threat to the country (Noland, 2016, p. 23). For instance, it seeks to impose tariffs on Chins exports to the US which is the biggest single destination for Australia’s exports. The US foreign policy is also impacting on Australia’s imports and exports. For example, the growth in the majority of its chief trading partners can be weakened in case the US adopts a diplomatic exit from Asia. The demand for the nation’s exports would diminish in the long-run. Imports, on the other hand, would reduce since the domestic market will be saturated with local goods. It will impact negatively on the GDP growth.
Consumption
Trade policies suggested by Trump are likely to affect Australia’s household negatively through the renewed and tremendous volatility in financial markets. In the short term, the uncertainty will discourage hiring and investment thus slowing down the nation’s economic growth. It, therefore, means that the levels of unemployment will rise and contribute to the decline in consumption habits because the majority of the citizens will have little or no income at all. Low consumption levels would lead to reduced economic growth (Vegh Gramont, 2013, p. 62). The instability in financial markets resulting from Trump’s move to cut on taxes is already reflected in Australian consumption market…Read more
References
Jin, X., 2013. Economic Growth and Sustainable Growth: An Uneasy Relationship. S.l.: Routledge.
Noland, M., 2016. Assessing trade agenda in the US Presidential campaign. Washington: Peterson Institute for International Economics.
Oosterbaan, M. S. R. V. S. T. &. W. N., 2000. The Determinants of Economic Growth. Boston: Springer US.
Vegh Grandmont, C. A., 2013. Open economy macroeconomics in developing countries. Cambridge: MIT Press.
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