subject: Bright Future For Australias Economy [print this page] Since 2012 has started, majority of the Asian markets remained distressed amid the Euro Zone debt crisis. However, in Australia, things are looking up in the economic aspect despite the high-valued Australian dollar and weak export demand globally. Although there are still weak spots in terms of inflation, retail sales, house prices, and construction, there are other economic data that have shown some signs of life for the Australian economy, and the flaws are projected to be reversed in due time. Home loans, consumer sentiment and export growth have rebounded. In addition, employment is also starting to move up.
Australian employers added more workers than economists forecast in January and the unemployment rate unexpectedly declined, as the nations resource-driven economy weathers Europes sovereign-debt crisis. Payrolls rose by 46,300 last month after a revised drop in December of 35,600, the statistics bureau said in Sydney today. That compares with the median estimate for an increase of 10,000 in a Bloomberg News survey of 25 economists. Also, the Land Down Unders jobless rate fell to 5.1 percent from 5.2 percent. A A$456 Billion ($489 Billion) pipeline of resource projects is spurring companies such as BHP Billiton Ltd. to increase hiring and help cushion a slump in manufacturing and services hit by a stronger local currency.
On the other hand, wage growth in Australia has not accelerated, but this is in line with the Reserve Bank of Australias (RBA) plan to keep overall inflation within their target range of 2 to 3 percent. Since Australias dollar is seemingly overpriced at the moment, inflation has to be controlled in order to spur consumption and economic growth domestically despite the adverse effects of an expensive local currency to export profits. Moreover, the RBA still has plenty of room to adjust monetary policy if inflation gets out of hand through slashing the highest interest rate in the developed world. In addition, investment is much attractive now with the help of the mining boom that is apt to reverse the weak export growth. With that, the aforementioned weaknesses of the Australian economy are ostensible to be minimized gradually. There are more reasons than it seems to look forward towards the progress of the mining-driven economy of Australia.
Despite of the bright spots in Australias economy, economists warn that the such economy is vulnerable despite of the fact that it avoided the worst of the global financial crisis, but recent emerging signs reveal a few key weaknesses.
For one, the high value of the Australian dollar, stemming largely as interest rates are relatively high in the country in the developed world, reduces the competitiveness of Australian exports. In fact, the strong Aussie is largely blamed for the loss of hundreds of jobs in Toyota last month, likely a testament to the vulnerability of the manufacturing sector. In fact, Manufacturing Minister Kim Carr has acknowledged that the value of the Aussie has already reduced global demand for Australian products. Likewise, the high Aussie is making matters more difficult for tourism, health tourism and educational services. Shifting sights to the labor front, the Unemployment Rate is pegged to rise this year despite an encouraging decline to 5.1 percent in January. Just last week, Qantas disclosed that it is planning to axe hundreds of jobs. About 1,000 bank workers were also told that they were losing their jobs.
by: sayem
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