Australia and Inflation

Australian Dollar has remained stable for 25 Years

The whole world is wondering at the economic strength of Australia since 1990. What is the secret? That is what everyone wants to know. Well folks the reforms on inflation in 1990’s are bearing fruit now. When the whole world was struggling with rising prices Australia was happy and rich. Australia has now one of the highest living standards in the world and has not seen depression for close to three decades now.

The past 25 year average inflation is 2.5% which is incredibly low for a growing economy. How does low inflation help the economy? It helps the middle and lower-income level people. They have more disposable income which they can use to raise their standard of living. This increase in purchasing power means economic upliftment which is continuous. This is the main reasons why an average Australian has a good lifestyle. The growth in wages has been more than inflation leaving the people a bit richer.

Another benefit of low inflation is lower lending rates. Availability of credit at lower rates means a better environment for new business. The debt is cheaper and this leads to more profit being made. This profit then ultimately is positive for the economy as a whole. This small step taken in 1990 has made Australia the healthiest economy of the world. An example that can lead to reforms in other countries.

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Australian Economy Positives and Risks

Australian Economy

How is the economy doing currently? The answer is it is doing better than last year and it is growing. The economy is expected to have an average growth rate of 2.7% as per the government. It is quite a good figure considering that whole of Europe has growth rate less than 2 percent.

It is not only the trade centers that are growing, but the whole Australia is showing signs of growth. Asia is the driving force behind the economic uplifting and remains the center of all activities. However there are dangers still lurking. Greek financial crisis is still a threat with the newly elected government unable to prevent the slide. Russia and Ukraine unrelenting unrest is a threat globally and affects Australia very closely. The war in Syria and other parts of Middle East adds another facet to the economic ripples in the world. Australia gets affected but is doing well covering these risks.

The brighter side is boost in spending and the falling inflation. However it is a double-edged sword.The low oil prices have left the economy with extra income which is boosting the economy as a whole. The wage rates are up and unemployment is at a ten-year low.

So what these things signify actually? The mood of the economy is good but the cautious approach is still the best approach. Household spending are up but soon the inflation will cross the zero mark and that will get affected. The investor has to be very careful as the manufacturing and construction sector are still not doing well. So, brace yourself for an uncertain future, but enjoy the good  moments now.

Investment in Australia

It has been risky to invest in these times of economic crisis. No sector or region has been left untouched by the economic slow down. However there has been an increase in foreign investment in Australia. Surprising but true.

Investments in Australia
Investments in Australia

When the whole world’s countries are seeing investors pull out or at least decrease their stake, why are investors increasing their stake in Australia?

  • Uninterrupted Growth – Australia is seeing 24th straight year of growth. Nothing has been able to stop it. The economy is well diversified and service based. High productivity drives all the industries forward emancipating growth and bright future. High ratings by all global rating agencies adds to the already positive business environment.
  • Driving Innovation – Australian economy has been embracing and promoting innovation over the years. Focus on research and development and education. New developments have helped the economy grow. It has been the place for innovations and discoveries.
  • Diverse workforce – The people living in Australia are from many cultures around the world speaking different languages. They comprise the workforce which is among the most educated in the world. Forty percent of the working population has an additional qualification which helps the overall productivity.
  • The Asian connection – Australia has been the traditional business partner of Asia. The geographical proximity makes it easier for trade. The trade with Asia is only next to US and UK. The ever-growing Asian market has led its own speed to the Australian growth.
  • Simple regulations – Doing business in Australia is easier than most countries around the world. It stands among the most transparent business environment. This helps to get the foreign investments and get the business kick started.

 

Economic Benefits of ICC Cricket World Cup 2015

The upcoming ICC cricket world cup will give a boost to the economy of Australia and New Zealand. The ICC Cricket World Cup is the premier One Day Championship. The tournament has changed a lot since its inception.

Colored clothing, huge sponsorships and sports tourism are only few of the benefits for the host countries. Last tournament was hosted and won by India. Australia has been the most successful team with four tournament wins.

ICC Cricket World Cup
World Cup Venues

Economic benefits of the Event

  • Advertisement – This major tournament acts as an advertisement for the host. It helps to tell the world about the hospitality of the nation. This naturally results in attracting the tourists and eventual expansion of the tourism industry.
  • Investments – The event work as the perfect place for investment in infrastructure. The best example is the Football world cup in Brazil which helped build the tottering infrastructure.
  • Culture – The event will help show case the unique culture of the host nation and help the travel industry.
  • Hotels – One of the major beneficiaries of major sports event is the hotel industry. There is a sudden increase in revenue.
  • Sales – There is an increase in consumption of various articles like Television, cola and cricket equipments.
  • Multi National Presence – The presence and active participation of companies like Nike, Adidas and cola giants have a positive effect on the economy.

Australian government has eased the visa rules for the international visitors across the country.

It will further the economy which is already growing at healthy rate. It is the best time to host the World Cup and I hope Australia wins.

Australia’s doing quite good, thank you.

We have a habit of complaining about the condition of the economy. It’s ingrained into our consciousness, so much so that we don’t even question the reality. Australia, according to most reports and studies, is one of the most stable, richest economies in the world. The average Australian was found to be one of the richest in the entire world, with less than 10% of the country’s population living under $10,000 a year (far, far below the global average of 70%).

Australian economy

In the past 30 years, the country has experienced a steady level of development as well. On an average, the country has experienced 3.3% of annual growth, which is no mean feat. Hardly any countries in the world have been able to experience such a peaceful economic growth. This growth has been so steady that there are a number of youth in the country that have never experienced an economic depression in their lifetime.

The country has been lucky enough to be situated in the fringe of global economic battles in this century, which has given it a unique stability one can not find in other situations. The country has a few problems, sure, but things are not as bad as they could have been, and that is worth celebrating.

Much needed reduction in oil price

Australia and a number of other countries are experiencing a fall in the price of oil. This long awaited good news comes after a period of unhappiness about the direction in which Australia’s economy is headed.

The drop in oil price comes because of the fact that we officially have more petrol than we are actually using. The prolonged period of trouble and strife in the Middle East combined with the excess supply of oil both caused a reduction in the price of petroleum, diesel and other related products in Australia. It’s expected that we will be seeing bowser prices we haven’t seen in a long time now.

Reducing Oil Prices

This is certainly good news for all motorists, who will be spending lesser money on travel. The reduction in aviation fuel price means that flights can be expected to cut down on flight costs a bit too. Even couriers and post will cost lesser, if this phenomenon lasts a little longer. It is expected that cargo prices will also be going down soon. In fact, one can expect prices of perishables to go down as well (since the perishables are the products that are delivered on a daily basis and will be affected by price of transport).

A number of industries will be affected positively and negatively by this falling trend, but the long term impact is yet to be fathomed.

Building Costs Rise in Australia

The cost of construction is on a historic high in Australia. Over the past year, the cost of building has increased by 4% which is not just higher than the historic average, but is also higher than the growth over the past five years. The housing market is incredibly buoyant right now, and it has affected the cost of construction throughout the country.

The buoyancy of the housing market might have increased the profit margins of the construction companies in Australia, and increased the cost of all equipment too. This situation has not done anything to increase the wages or the benefits of the people involved in construction work. The construction workers are not responsible for this increase in construction cost, and they are certainly not reaping the benefits of the same.

Increase in construction costs in Australia

Houses and office spaces have become more expensive to buy, but the rents have not gone up in a proportionate manner. In fact, the cost of renting is at an all- time low since after the 2000s. While this might not be good news for people looking to buy houses now, or for people trying to rent their home out, it is good news for people who already have a mortgage, for the RBA has reduced mortgage to a mere 2.5%.

Australia and China enter into economic deal

After a decade of negotiations and talks, Australia and China are going to enter into a free trade agreement together. The deal will be drafted and signed in 2015 and will promote the existing economic relations between the countries.

This deal will benefit Australia, for it will provide local winemakers, dairy farmers, and other professionals tariff free access to Chinese markets. 85% of Australian export to China (including beef, leather and minerals) will be freed from tariffs. The Chinese market is quite substantial in size and it will prove to be a goldmine for Australian suppliers in the future. China, on the other hand, will be able to export shoes, vehicles, clothes and electronics into Australia, duty free. China will also be able to invest up to the tune of 1.02 billion in the Australian market, without being subject to governmental review. Regulations in the service sectors of both the countries will be loosened.

Australia- China conclude trade agreement

Australia has been promoting it’s relationship with South Asian countries over the past few years. The area is valuable in terms of trade, and in terms of market.  This is the third economic fair trade agreement Australia has signed with a South Asian country in the past year- previously, treaties were signed with South Korea and Japan.