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.

Effect of Syrian Crisis on Australia

Syrian Refugees a crisis for the world

Syrian crisis is slowly but surely blowing out of proportion. This does not mean well for the world economy. The war is costing money and lives. Australia seems to be out for the moment, but is it so? Well the reality is different.

There are Australian units in the war in Syria.  The economy is feeding these soldiers and it will indeed has an effect on the economy. The recent shooting of the Russian fighter plane by Turkey does not augur well for the world. It might lead to a full on exchange between two blocks.

The world is slowly dividing itself into two blocks. Turkey and NATO on one side and Russia on the other is the current situation. USA is trying to be neutral but how long is the biggest question. Australia has bases of USA in Australia and here lies the threat. The bases are directly linked to control of USA in the southern hemisphere and Russia will surely see it as an aggressive base. Islamic State army is also not doing more than fuelling Russian war calls.

Australia gets economic grants from USA for supporting and keeping theses bases. It also is protection from Chinese aggression which is becoming a possibility by each passing year. So the future seems really uncertain. Hope the world leaders practice some restraint.

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.

Australia and Asia the economic brothers

Australia Asia Trade

Australia and Asia are natural partners and this has been proven over the centuries. Australia is the  largest trade partner of Asia and according to trends soon it will topple Canada as the second largest investor.

Almost tow thirds of exports from Australia land as imports to the Asian nations. It is due to proximity and due to competitive pricing and policies.The Australian government has played a very important role in building the relationship.

  • Reforms – Australia sensed the importance of Asian markets much before Europe and Americas. Hence policies were framed accordingly. The policies encourage trade with the Asian nations which are one of the most lucrative markets for companies all over the world. The decision taken with vision has helped Australia to become the biggest trade partner of Asian nations.
  • Removing Restrictions – Australia has made special provisions to remove trade restrictions and that has helped to capture the markets in Asia. China one of the largest economies of the world has a long-term relation with Australia.
  • Building a competitive workforce – Australia has made immigration laws better for Asian nations helping it to build a competitive workforce. The Asians have made Australia a  place to invest due to lowered wage patterns.

The APEC (Asia-Pacific Economic Co-Operation) has also been responsible for building the trade relations. Australian economy has been robust due to strong presence in Asia even during the economic crisis which affected the whole world. Asia also benefited from the relation, and recovered quite quickly from the effects of the crisis. Australia and Asia are truly brothers economically. Read more here for updates.

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.