Australian Economy Essay

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Australian Economy

The UAE economy

Macroeconomic analysis of the Economies

Australia

GDP

Household final consumption expenditure

General Government final consumption expenditure

CPI & Inflation

Unemployment

Interest rates

Exchange Rates

Government Spending & Taxes

Money Supply

United Arab Emirates

GDP

Household final consumption expenditure

General Government final consumption expenditure

CPI (Consumer Price Index)

Inflation

Unemployment

Interest Rates

Exchange Rates

Government Spending & Taxes

Money Supply

In this paper, we describe as well as compare the economies of two countries (United Arab Emirates (UAE) and Australia).We do this by effectively researching the economic characteristics of two national economies, and then selecting a limited number of critical variables which can best be used in describing their similarities and differences. We also research the critical background on the two national economies so as to explain their current economic situation while also suggesting their likely future economic states. The paper begins by presenting a general introduction to the two economies. This is the followed by a detailed and in-depth macroeconomic analysis of Australia's and UAE's economies.The specific variables to be compared are GDP and its components final consumption expenditure, General Government final consumption expenditure and gross capital formation, CPI and Inflation, unemployment, Interest Rates, Exchange Rates, Government Spending & Taxes as well as Money Supply. The analysis is specially illustrated and explained by means graph data spanning ten years. A discussion then follows followed by a conclusion on the better economy among the two.

Introduction

A comparison and description of the Australian and UAE economies is important to investors and multinationals who are interested at the country-level suitability analysis. This is because of the advantages of investing in vibrant economy and the risks associated with investing in a shaky economy. In this paper, we present a detailed comparison and description of the Australian and UAE economies with a view of coming up with the most appropriate investment destination.

The Australian Economy

Australia has a GDP of about U.S.$1.57 trillion (CIA,2012).The Australia economy is valued at more than $6.4 Trillion and is the thirteenth largest national economy by virtue of nominal GDP. It is the 17th largest economy when measured by the level of PPP adjusted GDP.It comprises close to 1.7% of the global economy. The economy is dominated by the service sector (makes 68% of its GDP).The mining sector represents close to 10% of its GDP while the mining related economy sector makes 9% of the economy (Collebatch,2009). Australia's economic freedom is fairly high. Te foundations of Australia's economic freedom are quite strong and are anchored on an excellent protection of personal and private property rights as well as an independent judiciary that is very strict on corruption issues.

The nation's modern and highly competitive economy highly benefits from its very strong commitment to the open-market policies that make its easy to trade and invest. The country also has very transparent and very efficient regulations that make entrepreneurship very dynamic.

The UAE economy

The UAE economy is valued at $360 billion. Its DGP ranks second in the category of CCASG ().

Macroeconomic analysis of the Economies

Australia

GDP

According to the World Bank (2011),Australia's Gross Domestic Product is $1.37 Trillion U.S. dollars at the current prices. Australia's GDP value represents close to 2.21% of the global economy. According to the World Bank, Australia's GDP averaged U.S.$328.07 between 1965 and 2011 and reached its highest peak of U.S.$1,371.76 Billion in 2011. In 1965,it reached its record lowest level of U.S.$25.44 Billion. The GDP is used in measuring the country's income as well as output of the nation's economy. It equals the national expenditures for all the goods and services that are produced within the nation in a stipulated time interval.

Figure

Figure 1: A chart showing historical data for Australia GDP with Projections for future performances.

Household final consumption expenditure

According to OECD (2009), household final consumption expenditure is an indicator that covers all of the purchases that are made by the residents of households (both at home and abroad) in order to meet their day-to-day needs such as food, housing, clothing, energy, durable goods, transport, health, leisure and miscellaneous. This figure also includes a large number of imputed expenditure.

Australia's Household Final Consumption Expenditure is currently at U.S.$727.09B

Australia's Household final consumption expenditure over a 10-year period

General Government final consumption expenditure

According to the World Bank (2012), the General government final consumption expenditure (expressed as a % of the GDP) includes all of the government current expenditures for the purchases of various goods and services.

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It includes the compensation of all the employees.It also includes most of the expenditures on the national defense as well as security with an exclusion of the government military expenditures as part of the government capital formation.

Australia General Government Final Consumption Expenditure is currently at $US246.86B, up from $US162.62B one year ago. This is a change of about 51.80% from one year ago.

Historical data for Australia General Government Final Consumption Expenditure

CPI & Inflation

Australia Consumer Price Index is at a currently at 121.01, this is up from 120.41 which was recorded last quarter and up from the value of 119.60 one year ago. The figure denotes a change of 0.50% from the last quarter and about 1.18% from one year ago..Inflation stands at 2.8%.

Unemployment

Unemployment Rate in Australia had decreased to 5.20% by November, 2012 down from 5.30% recorded October of 2012. The Unemployment Rate in Australia is usually reported by the Australian Bureau of Statistic and historically between 1978 and 2012, Australia Unemployment Rate has averaged 6.97% and attaining an all time high of 10.90% in December, 1992 as well as a record low of 4% in the February of 2008. This indicator measures the number of individuals actively seeking employment as a percentage of the labor force.

Historical data of Australia unemployment rates

Interest rates

The benchmark interest rate in Australia was recorded lastly at 3%.

Exchange Rates

The Australian Dollar has exchanged fairly well against the UAE Dirham

Government Spending & Taxes

The Government Spending & Taxes has been on the rise over the last coupe of years (Laurie & McDonalds,2008).

Money Supply

Money supply/money stock refers to the total amount of monetary assets that is available in a given economy at a specific time (Brunner, 1987).

Money Supply M3 in Australia increased to AUD$1,496,551 Million in the October of 2012 from AUD$1,492,592 AUD Million reported in September of 2012

United Arab Emirates

GDP

United Arab Emirates GDP is currently at U.S.$360.25B, up from the U.S.$270.33B value one year ago. This change represents 33.26% from a year ago. UAE's GDP was worth U.S.$360.25 billion in 2011. This GDP value of represents close to 0.58% of the global ecoomy

The Gross Domestic Product (GDP) in the United Arab Emirates was worth

Household final consumption expenditure

United Arab Emirates Household Final Consumption Expenditure is at 57.30% as compared to Australia's 53% .This means it is higher than Australia's figure.

General Government final consumption expenditure

Is generally lower than that of Australia

CPI (Consumer Price Index)

UAE's overall Consumer Price Index (CPI) attained avalue of 116.86 in August 2012, and in comparison with the base year (2007 =100); it experienced an increase by close to 0.33% as compared to its value in July 2012.

Inflation

The inflation rate in the UAE was recorded at 0.50% in October of 2012.

Unemployment

Unemployment Rate in the UAE rose to 4.60% in 2011 from 4.30% in 2010.

Interest Rates

The benchmark interest rate in the UAE was last noted to be at 1%

Exchange Rates

The UAE Dirham has exchanged poorly against the UAE Dirham

Government Spending & Taxes

The UAE government spending is U.S.$80.1 while that of Australian government is higher at Money Supply

Money Supply M3 in the UAE increased to AED 1048800 Million in the August of 2012 from AED 1033000 Million reported in July of 2012.

Conclusion

Generally we see that the Australian economy is better that the United Arab Emirate's economy across several macroeconomic indicators except on interest rates. This means that it would be better to invest an interest-sensitive business in UAE as compared to Australia.The Australian economy has a higher level of freedome as compared to the UAE one. Australia's economic freedom is fairly high. Te foundations of Australia's economic freedom are quite strong and are anchored on an excellent protection of personal and private property rights as well as an independent judiciary that is very strict on corruption issues. The nation's modern and highly competitive economy highly benefits from its very strong commitment to the open-market policies that make its easy to trade and invest. The country also has very transparent and very efficient regulations that make entrepreneurship very dynamic. UAE also has a good level of freedom and is better than most Middle East and African.....

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