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.

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.