A Macroeconomics Presentation

Commonwealth Of

Australia
A journey through Australian Economy

Group - 6
 Introduction
World Geography:
Australia is the 6th largest country and 7th largest continent

World Economy:
Australian GDP : $ 1.719Trillion
GDP share of WC : 1.67%
HDI Ranking : 5
Per Capita Income : $ 64,674
Currency AUD($)
GDP Deflator : 107.11
GDP Growth Rate : 3.61%
 Govt Expenditure : $ 0.433 T

2009 - Great Depression(Lemman Brothers Debacle)

2016 - Effects of Brexit and Crude Oil
2020-21 - Covid 19 Implications
% of Govt Expenditure in GDP
 Item 5

Foreign Reserves
Canidian Dollar 9.1%
4.5%

Yen
4.5%

US Dollar
40.9%

Size and Composition of Foreign Reserves: Euro

40.9%

Current Value: Australia's foreign exchange reserves

portfolio is valued at around AU$42 billion.

Historical Trends: Reserves have typically averaged

just over 4% of GDP since the floating of the
Australian dollar in 1983.
Fluctuations observed in exchange rates during
market volatility

Financial Impact: Significant annual valuation

gains or losses due to fluctuations in the
Australian dollar
Ranging between annual gains of over AU$6 billion
and losses exceeding AU$5 billion in heightened
volatility periods.
 Foreign Reserves
Acquisition and Management:
Methods of Acquisition- reserves through methods like
borrowing foreign currency, currency swaps, or outright
purchase
Balance Sheet Implications

Relevance of Foreign Reserves

Role in Economic stability: Foreign reserves serves
as a policy tool
RBA's Strategies and Relevance:
Mitigating Risks
Relevance in Economic Context
Deficit & Revenue :
Identified $49.6B in savings since
election
92% of revenue upgrades returned
to the budget since May
Debt Management :
Gross debt expected to peak at
35.4% of GDP in 2027-28
Anticipated avoidance of $145B in
interest costs on inherited debt
Cost-of-Living Relief :
Rolled out $23B in targeted relief,
reducing inflation by ½ ppt
Energy bills, medicines, childcare,
and rent assistance increased
Economic Growth Investments :
Allocated $6.5 billion for housing
supply and affordability boost
Investments in renewable energy
projects and healthcare
Fiscal Economic Outlook & Labor Market :
2030
Forecasted moderate growth of
Policies 1¾ per cent in 2023–24; low
unemployment remains stable
Taxation & Social Support :
Household income boosted via
progressive tax cuts
Support for low and middle-income
earners through offsets up to
$1,500
 INFLATION AND TREND PREDICTION OF AUSTRALIAN ECONOMY

Future Trend Prediction

Inflation:
Economic Overview:
Average inflation rate in 2022: 6.61% (compared to previous year)
One of the world's largest economies
Product basket includes groceries, rent, utilities, leisure, energy, taxes
G20 member (Group of Twenty major economies)
Inflation projections available until 2028
Significant global importer and exporter

Growth Drivers: Economic Performance:

Mining sector: exports iron ore, coal, natural gas, etc. GDP doubled in the past decade
Agricultural sector: exports beef, grain, dairy, etc. Quick recovery from 2008 financial crisis
Major trading partner: China (recipient of many exports) Continued economic growth and increasing productivity
Australian Monetary Policy
HISTORY
2008 financial crisis
embarked on a period of
aggressive rate cuts
Quantitative easing (QE)
programs from 2020 to
2022
2021, the RBA adopted a
flexible inflation target of
2-3%
Global inflationary
pressures mounted in 2022,
the RBA began raising
interest rates
CURRENT TREND EXPECTED FUTURE
Gradual Tightening
RBA has signaled that it is likely
to continue raising rates in the
Reason:-
near term
Inflation
Economic growth:
Monetary Policy Action:
Unemployment.
Cash rate hikes-(RBA) has
started raising the cash rate
Target :- Focus on inflation-bring
Reserve Bank of Australia (RBA) inflation back within the target
has an inflation target of 2-3% range
on average over the medium term Communication-
from 6.9%. communicates its policy
decisions and economic
outlook through statements
and media conferences
 Unemployment rate in the last four years

2020 2021 2022 2023

The COVID-19 The The unemployment The
pandemic unemployment rate continued its unemployment
significantly rate continued downward trend in rate has remained
impacted the to decline 2022, reaching a relatively stable
unemployment throughout record low of 3.4% in 2023, hovering
rate, causing it to in June. between 3.5% and
2021, reaching
spike to a peak of However, it 3.9%.
5.6% by
fluctuated slightly The latest figure
7.4% in July. December. and ended the year (November 2023)
at 3.5% is 3.9%
Thank you
very much!