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Coal, climate and change

Until trade liberalisation in the mid 1980s, Australia had a large textile industry. In 2018 Australia became the country with the largest median wealth per adult, but slipped back to second highest after Switzerland in 2019. Australia's total wealth was estimated to be AUD$10.9 trillion as of September 2019. While Australia's overall national economy grew, some non-mining states and Australia's non-mining economy experienced a recession. From the early 1980s onwards, the Australian economy has undergone intermittent economic liberalisation. In 1983, under prime minister Bob Hawke, but mainly driven by treasurer Paul Keating, the Australian dollar was floated and financial deregulation was undertaken.

What motivates the economic choices of the individual?

Individuals Maximize in Pursuing Self-Interest

What motivates people as they make choices? Perhaps more than anything else, it is the economist's answer to this question that distinguishes economics from other fields.

In terms of GDP (measured in U.S. dollars), Australia is well down the list among the major currencies, with the 14th-largest economy. The nation's central bank, the Reserve Bank of Australia is fairly conservative, takes seriously the need to curb inflation, and tends to keep interest rates comparatively high. While Australia is only the 14th largest country in the world in terms of GDP and 50th largest in terms of population, its dollar is among the top five most frequently traded currencies in the world. To realise the full economic and social potential of this growing hub, Colin says that change needs to be carefully planned, managed and executed, particularly in terms of infrastructure.

States and territories ranked by unemployment rates

Turning to the recent history of the bulk freight market, the key C5 WA–China route averaged $7.78/t in the first half of financial year 2021, a 41 per cent increase over the previous half. That is a little above the average achieved across the three calendar years prior to COVID–19. Excluding the prior half as an outlier, volatility was slightly higher than in recent history. We continue to believe that a more accommodative, state–based policy environment for onshore gas development – both conventional and unconventional – has the capacity to provide significant additional supply to the market at reasonable cost. Crude oil prices ranged from a low of around $37/bbl to a high of around $52/bbl in the first half of financial year 2021.

What are the 7 economic goals?

National economic goals include: efficiency, equity, economic freedom, full employment, economic growth, security, and stability. Economic goals are not always mutually compatible; the cost of addressing any particular goal or set of goals is having fewer resources to commit to the remaining goals.

In addition, mergers between the four largest banks and the two largest insurers are permissible under the 1997 financial sector reforms, subject to approval by the Treasurer; mergers among the four largest banks, however, are not permitted. In its offer in the WTO Agreement on Telecommunication Services, Australia allowed unrestricted competition in basic telecommunication services as of July 1997 and has removed its foreign equity restrictions in the second basic service provider, Optus. Trade liberalization in the services sector has also been pursued under the Services protocol signed with New Zealand, exposing them to a greater degree of competition. However, other vital services such as maritime and port services remain to be reformed. Looking even further out, long term demand from traditional end–uses is expected to be solid, while broad exposure to the electrification mega–trend offers attractive upside.

Australia should push ahead with trade policy reforms to increase its overall competitiveness

This implies that it will be even more important to create competitive advantage and to grow value through driving exceptional operational performance. On the topic of differentials, we note that direct–charge materials – pellet and lump – had a volatile year. Direct charge premia compressed materially for much of calendar 2020, with strong lump supply out of Australia and redirected pellet cargoes from Europe contributing to a build–up in port stocks of these products even as fines inventories were declining to multi–year lows. These unique circumstances have since corrected, and premia have widened again, with lump premia spiking substantially higher in January 2021 to $0.38 per dmtu, up from a meagre $0.04/dmtu during the rainy season lull. Fines differentials to the 62% index for the 65% and 58% indexes narrowed very slightly half-on-half .

Though the state of Australia's economy should be a concern to Australians, it is unlikely that the Australian dollar will fade from importance even as the Chinese yuan becomes more significant in the region. Alongside population growth and jobs creation, there's an opportunity to boost Australia's productivity as a global supplier and consumer of goods. The Western Sydney Airport will facilitate improved productivity by providing businesses with better connections and accessibility to national and transport networks. More than that, it will stimulate new investment in the region and support growth in surrounding businesses. Supporting this, a study on aviation capacity found that demand for aviation services within the Sydney basin is anticipated to exceed potential supply by 2032. Air freight is also forecast to increase from 490 tonnes per annum in 2012 to 2.3 million tonnes by 2060.

The importance of domestic dynamics is illustrated by the fact that while inflation has accelerated above ten-year averages across advanced economies, it is more acute in some – the US and New Zealand – and much less worrisome in others, including Australia. There are some early signs that the momentum in global supply chain dislocation is peaking, with shipping costs and oil prices having declined by 40 per cent and 15 per cent since their respective October peaks. This would, of course, be in stark contrast to the past decade where central banks have battled against too low inflation and would require a monetary policy response. While the delta lockdowns and emergence of omicron have served as a reminder that the pandemic is still with us, businesses are now more pre-occupied with labour shortages and concerns about rising inflationary pressures. Discover how EY insights and services are helping to reframe the future of your industry. Gross domestic product is the monetary value of all finished goods and services made within a country during a specific period.

We anticipate that the current concerns in some northern provinces will be contained in similar fashion. We also note that a very cautious approach is being taken to the mass movement of people around the Spring Festival, with both source and destination regions encouraging migrant workers not to travel home for the holiday. Although it accounts for a significant portion of global greenhouse gas emissions, the transportation sector has hardly broken its high dependence on oil. Within the transportation sector, passenger road transport plays a considerable role in terms of both energy consumption and emissions. This paper, therefore, aims to contribute to the knowledge and theory of sustainability transitions in passenger road transportation by addressing the question, “How do actors and technologies interact to shape the process of sustainability transitions in road transport? ” To help answer this question, Actor-Network Theory is applied to a local-level case study of an electric carsharing company in Brno, Czech Republic.

Demand from power and telecom infrastructure, machinery, white goods and electronics expanded, while construction, transport and air conditioners declined. Within the power infrastructure sub–set, energy transition investments was the major source of growth, rather than the traditional driver of conventional investment in the grid. In the first half, the trade effectively cleared through China, with demand from other geographies having collapsed under the pressure of COVID–19 lockdowns. After a quarter of relative calm in September, with green shoots emerging in India, Europe and South Korea allied to the continuation of strong Chinese demand, we experienced trading conditions that were the near polar opposite of those seen in the first half. The observation that seaborne supply conditions for this calendar year and next are highly uncertain, both in aggregate and in terms of quality profile, is self–evident, as it has been since the Brumadinho tailings dam tragedy in January 2019.

The combined METS-Mining Sector in Australia contribute an estimated 15% of GDP, supports over 1.1 Million jobs, almost 10% of all full time employment – including regional and remote communities. Australian firms should plan for higher, but not historically high, inflation and interest rates – which will require a different strategy from the past five to ten years. This strategy shouldn’t just encompass cost control, which is part of the story, but should extend to productivity enhancing investments, changes in processes and a renewed focus on innovation to make more with less.

what are the key drivers of the australian economy

On average, the spread widened to 32 per cent in the first half financial year 2021, versus an outcome close to the historical average of around 20 per cent in the prior half. Whilst there is industry consensus that there is an ample indigenous resource base to meet long term domestic demand, the future cost to extract and process this resource appears to be rising. Our base case is that demand will rise modestly above pre–COVID levels in the coming years, before reaching eToro Review a plateau in the medium run. In the phase that precedes the plateau, the twin disruptive levers of efficiency and electrification that are operating on the road transport segment are more than offset, from a total liquids demand perspective, by the impact of rising living standards in the developing world. While we are confident that demand will rebound elastically this calendar year, and the price path will have an upward tilt on average, the situation remains complex.

This would raise export receipts in Australian dollar terms, insulating commodity producers from lower world prices while restoring lost competitiveness to other sectors such as manufacturing, tourism and higher education. In this way, a lower exchange rate would act as a shock absorber for the broader economy. Mining, along with agriculture, will continue to be key drivers of growth in the Australian economy – but we can expect to see expansion in other sectors such as tourism, the health and financial services sectors, banking and securities. Wooden acknowledges the prospect of a recession is now greater than any time since 2008, and says the economy is “on a knife edge”. The Commonwealth Bank chief economist, Michael Blythe, says the market consensus is that a recession is a one in five chance (based largely on fears about the US-China trade war) though he doesn’t expect one himself.


Australia's per-capita GDP is higher than that of the UK, Canada, Germany and France in terms of purchasing power parity. The country was ranked eighth in the United Nations 2019 Human Development Index and sixth in The Economist worldwide quality-of-life index 2005. In 2014, using constant exchange rates, Australia's wealth had grown by 4.4% annually on average after the financial crisis of 2007–2008, compared with a 9.2% rate over 2000–2007. Australia's sovereign credit rating is "AAA" for all three major rating agencies, higher than the United States of America. The Australian Securities Exchange in Sydney is the 16th-largest stock exchange in the world in terms of domestic market capitalisation and has one of the largest interest rate derivatives markets in the Asia-Pacific region. Some of Australia's largest companies include Commonwealth Bank, BHP, CSL, Westpac, NAB, ANZ, Fortescue Metals Group, Wesfarmers, Macquarie Group, Woolworths Group, Rio Tinto, Telstra, Woodside Energy, and Transurban.

Jobs and skills that will enable the automation and integration of semi and fully autonomous equipment into the mining value chain, including interoperability platforms and data enablement. While there is always some variation in inflationary outcomes at an item level, the current pattern is unique for two reasons. This chart, which shows every item in the consumer basket, serves as a useful visualisation of this. On the vertical axis is the year-on-year growth in each item’s price, and along the horizontal axis is the weight of the item in the consumer basket. Businesses in Australia need to prepare for higher inflation, but we do not expect inflation to accelerate rapidly – as we are seeing in the US. Australian inflation has risen, but by a much smaller magnitude, up from 1.8 per cent to 3.0 per cent currently and less than double the ten-year average.

In the PMV industry value-added requirements exist to make a company eligible for the duty-free import allowance scheme. Solar panels begin installation in northern Goldfields An exciting milestone as the first solar panels start to be installed at Leinster Nickel Operation! The Northern Goldfields Solar Project is being built by TransAlta and is BHP’s first off-grid large-scale renewable energy project across our global operations. 40The ship breaking industries of India, Bangladesh and Pakistan are ranked #1, #2 and #4 globally. 34 Unless otherwise specified, price references are estimated realised prices for 60 per cent K2O standard MOP FOB Vancouver–equivalent.

But in North America, the lumbering savings and loans industry was facing decline, which eventually led to a savings and loan crisis which compromised the well-being of millions of US people. The following recession thus impacted the many countries closely linked to the US, including Australia. Paul Keating, who was treasurer at the time, famously referred to it as "the recession that Australia had to have." During the recession, GDP fell by 1.7%, employment by 3.4% and the unemployment rate rose to 10.8%. However, the recession did assist in reducing long-term inflation rate expectations and Australia has maintained a low inflation environment since the 1990s to the present day. Australian trade and investment polices and measures will continue to reflect the Government's desire to encourage business to capitalise on opportunities arising from globalization, improved market access conditions and the information revolution. Streamlined regulation, increased transparency and broader consultation will provide clearer parameters in which to pursue trade and investment opportunities.

Breakthroughs for a green economy? Fiancialization and clean energy transition

Through various programs, such as the Skilled Migration Program, the government works to draw in skilled foreign nationals. Labor market reform is a microeconomic policy targeted at encouraging a more competitive, productive, and safe working environment and labor force. Australia’s inflation has been clawing itself out of a slump in 2016, when it unceremoniously dropped to 1.25 percent due to falling petrol costs and oil prices. The following year, it recovered instantaneously and soared back to just under two percent, and forecasts see it reaching 2.52 percent by 2021.

The government has already undertaken a number of regulatory reforms and other support for fintech development but more needs to be done. This includes promoting access to data, which will be needed to realize fintech possibilities. Additionally, the government will need to address a range of domestic and international issues regarding fintech governance. Australia should consider adopting some of these legal pillars that have underpinned the development in the U.S. of a digital economy, specifically U.S.-style fair use exceptions to copyright exceptions and extending safe harbor framework to internet intermediaries. The expansive use of data will be needed across the economy and within sectors that traditionally have been outside information technology , such as manufacturing, mining, and agriculture.

what are the key drivers of the australian economy

The participation rate fell from 65.9 per cent in March to 63.6 per cent in April, and bottomed out at 62.7 per cent in May . COVID‐19, lockdowns and the closure of borders have had a massive negative pervasive impact on Australiaʼs economic performance in 2020. Overall, GDP plummeted by a record 7 per cent in the June quarter following a small fall of 0.3 per cent in the March quarter. Compared to 2018–19, net overseas immigration is expected to fall by quebex more than 30 per cent in 2019–20 and to turn negative in 2020–21 and 2021–22 . The Parliamentary Budget Office estimates population growth to slow from 1.2 per cent in 2019–20 to 0.2 per cent in 2020–21 and 0.4 per cent in 2021–22—the lowest growth on record for 100 years . The closure of international borders caused a sharp fall in the movement of people (especially short‐term visitors, which includes tourists and international students) to Australia.

As the mining boom wanes, Australia pivots to services

But the country’s socio-cultural context – social, cultural and geographic – is also critically important, since it amplifies the economic impact. Additionally these socio-cultural elements are increasingly utilised narratively by energy regime incumbents in strategic efforts to maintain business-as-usual. This is particularly so at a time when climate awareness is growing and renewables have established themselves as both popular and viable.

What do you know about physical capital?

Physical capital consists of tangible, human-made objects that a company buys or invests in and uses to produce goods. Physical capital items, such as manufacturing equipment, also fall into the category of fixed capital, meaning they are reusable, and not consumed during the production process.

That effectively meant a rise in Australia’s purchasing power over foreign-produced goods and services. Australia’s mining boom began 10 years ago, sparked by an extraordinary rise in world commodity prices, arising from strong demand for raw commodities in fast growing Asian economies, most notably China and India. While a gradually rising level of home prices in line with growth in the economy is healthy and positive for the wealth of existing property owners very high house prices and debt levels relative to wages pose two key problems. While interest rates may be at record lows, the surge in prices relative to incomes has seen the ratio of household debt to income rise nearly 3-fold over the last 30 years, going from the low end of OECD countries to the high end. The ratios of house prices to incomes and rents versus long-term averages are at the high end of OECD countries.

Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities. The RBA has signalled that it intends to maintain extremely accommodative monetary policy settings to support economic recovery. The RBA has stated that it does not intend to increase tighten monetary policy until inflation is sustainably in the 2% to 3% range.

More broadly, we anticipate environmental concerns will become an even more important consideration in future policy design than they are today. Within this context, China’s plans to see emissions peak in advance of 2030 looks readily achievable, while hitting its net zero by 2060 objective is a considerably more challenging task. The aggregate outcome has been a far more resilient picture than might reasonably have been expected, with exports back to pre–COVID levels in volumes terms by July, four months ahead of global trade reaching that milestone.

Consumption expenditure also fell, by 1.3 and 12.5 per cent in the March and June quarters respectively. In all, growth in Gross Domestic Product was negative in two consecutive quarters (−0.3 and −7.0 per cent), placing the economy officially in recession after a run of 29 years of continuous growth. Despite the expansionary macroeconomic policies, the closure of international borders had immediate negative repercussions on the flow of overseas students and international tourism. The education sector responded by adopting online teaching, although it has still suffered severe income losses. The hospitality sector was heavily affected, both from the demise of tourism and the loss of domestic business due to closures.

In the calendar year 2020, India’s crude steel output fell by –10.6 per cent while pig iron output fell by –8.7 per cent YoY. In the same period, Japan, Europe and South Korea contracted by –16.2 per cent (pig iron –17.8 per cent), –8.8 percent (pig iron –12.4 per cent) and –6.0 per cent (pig iron –4.0 per cent) YoY respectively. Note that the exposure to indirect exports of these three regions sits between 14 per cent and 19 per cent. The Developed Asian producers are also highly exposed to direct exports, at 31 per cent and 20 per cent of production for Japan and South Korea respectively, versus a trivial 1 per cent for Germany. Among the range of possibilities we consider, our base case is that Chinese steel production has entered a plateau phase, with the literal peak to occur no later than the middle of this decade.

Supermarkets and Grocery Stores in Australia

The IHS Markit Flash Services Business Activity Index rose to 58.6 in April, from a final reading of 55.5 in March, signalling the strongest increase in service sector output in the survey history. Economic recovery has continued during the first quarter of 2021, with the IHS Markit PMI survey help pennant displayed readings for both manufacturing and services signaling expansionary conditions throughout the first three months of 2021. Fitch Solutions Country Risk & Industry Research analysts outline the key themes they believe will play out globally, regionally, and across core industries in 2022.

Consumer Goods Retailing in Australia

Also, while the unemployment rate was hovering below 6 per cent, underemployment was approximately 8.5 per cent, indicating slack in the economy. Overall, Australia has been negatively affected by the decline in world trade for both goods and services. In the first half of 2020, global goods trade fell by a historically large 18.5 per cent over the year to June . However, as revealed in the June quarter National Accounts, although Australian export volumes contracted by 11 per cent, imports fell by a greater amount, reflecting weak domestic demand. On balance, net exports contributed 2.5 percentage points to June quarter GDP growth. In the September quarter, although imports rebounded, export volumes continued to fall, reflecting ongoing travel bans and weaker demand for resources.

Along with the tragic loss of life and strain on healthcare systems, billions of people have seen their livelihoods disrupted, with informal labour markets in the developing nations particularly hard hit. The gains have been led by houses and regional Australia, with units and Melbourne lagging. And while the monthly pace of growth has slowed from 2.8% in March, despite east coast lockdowns daily CoreLogic data indicates that its remained strong at around 1.3% in September. The gains have been driven by record low mortgage rates, buyer incentives, a tight jobs market, a desire for more home space as a result of the pandemic and working from home, numerous government home buyer incentives, the “fear of missing out” and lower than normal listings.

From global industrial forecasts to sub-city economic trends, our team of market-leading economists leverage global expertise and local knowledge to serve clients across all industries and sectors. Australia should develop a multifaceted international agenda with respect to digital trade that includes engagement at the World Trade Organization and through free trade agreements. It should also look to influence the agendas at the G-20, APEC, the OECD, and international standards organizations. In many respects, the growing importance of connectivity, data, and digital services will be key to any move to smart manufacturing and is a development that could play to Australia’s existing services strengths. This is underpinning a broader shift in manufacturing value added being derived from services.

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