Macroeconomic Management

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Final presentation for Course 5171 Economics

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Macroeconomic Management

  1. 1. Macroeconomic Management Yaw Ofosu Ayesha Tanveer Geneva Todd Course 5170
  2. 2. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
  3. 3. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
  4. 4. General Information <ul><li>Capital : Canberra </li></ul><ul><li>Surface area : 2.9 million sq. miles </li></ul><ul><li>Resources : Coal, Iron Ore, Gold, Petroleum, Natural Gas </li></ul><ul><li>Official language : English </li></ul><ul><li>GDP : ≈$1.2 trillion; GDP PPP : $882.3 billion </li></ul><ul><li>Monetary Unit/Currency : Australian Dollar = A$ </li></ul><ul><li>Exchange rate : A$1 = US$0.9947 (Jan 12, 2010) </li></ul><ul><li>Head of State : Queen Elizabeth II, represented by Governor-General Ms. Quentin Bryce </li></ul><ul><li>Head of Government : Prime Minister Ms. Julia Gillard </li></ul>
  5. 5. <ul><li>Population : 22,451,006 </li></ul><ul><li>GDP per capita : $54,869; GDP per capita PPP : $39,692 </li></ul><ul><li>Unemployment Rate : 5.2% </li></ul><ul><li>Literacy Rate : 99% </li></ul><ul><li>Multilingual : 4 million Aussies speak a two languages </li></ul><ul><li>Life Expectancy : Females 83.7 years, Males 79.2 years </li></ul><ul><li>Median Age : Females 38.1 years, Males 37.3 years </li></ul><ul><li>Potential Workforce : 67.5% of population and growing 200,000+ annually </li></ul>Demographics
  6. 6. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
  7. 7. Relationship of Government to Economy <ul><li>Free market </li></ul><ul><li>Sound and practical structure of financial regulations and institutions </li></ul><ul><li>Open to investment without unnecessary delay </li></ul><ul><li>Strong, transparent corporate governance </li></ul><ul><li>Business-oriented corporate regulation and insolvency procedures </li></ul><ul><li>Low barriers to trade and investment </li></ul><ul><li>Flat corporate tax rate of 30% </li></ul>
  8. 8. Political Stability <ul><li>Ranked 3 rd in the world for political stability in the  IMD World Competitiveness Yearbook 2010 </li></ul><ul><li>Risk of Political Instability </li></ul><ul><ul><li>0 = Very High </li></ul></ul><ul><ul><li>10 = Very Low </li></ul></ul>The risk of political instability is very High Low Ranking Country Rating (2010) 1 1 NORWAY 9.36 2 LUXEMBOURG 9.25 3 AUSTRALIA 9.24 4 FINLAND 9.20 5 DENMARK 9.11 6 AUSTRIA 9.00 7 SWITZERLAND 8.93 8 CANADA 8.90 9 CHILE 8.86 10 SINGAPORE 8.78 11 SWEDEN 8.77 12 NEW ZEALAND 8.76 13 QATAR 8.68 14 GERMANY 8.49 15 FRANCE 8.46 16 USA 8.16
  9. 9. Business Operations <ul><li>Business Enterprises: </li></ul><ul><li>Companies, Partnerships, Joint Ventures, Trusts, Sole Traders </li></ul><ul><li>Corporate Taxation </li></ul><ul><li>Incorporated in Australia </li></ul><ul><li>Carries business there </li></ul><ul><li>Australian voting power </li></ul><ul><li>Taxable Assets </li></ul><ul><li>Assets used by non-residents </li></ul><ul><li>Real estate in country </li></ul><ul><li>Interest </li></ul><ul><li>Shareholding greater than 10% in public companies </li></ul>
  10. 10. Government Revenues
  11. 11. Estimates of General Government Sector Expenses
  12. 12. Estimated Expenses by Function
  13. 13. Estimated Expenses by Function 9%* * Other Functions Not shown
  14. 14. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
  15. 15. Economic History 2010 5% U.E. -Budget Surplus Reported 2009 Key Rate Raised by Central Bank 2008 17 Years of Growth 2006 ASX Formed 2005 Net Gov’t Debt Eliminated 1990s 11% U.E. - Economic Reforms Instituted 1960 3.37% Ave. annual GDP growth begins 1800s Gold Rush
  16. 16. Economy <ul><li>Stable and Competitive Economy </li></ul><ul><li>Real GDP Growth = 3% change YoY in 2010 </li></ul><ul><li>1 st in Asian-Pacific Labor, Agriculture and Industrial Productivity </li></ul><ul><li>Total Economy: Resources sector (7.5%), Financial services (10.8%), Manufacturing (9.3%), Construction (7.8%) </li></ul><ul><li>Strong Economic Management </li></ul><ul><li>2010 budget surplus: 3.5% of GDP ($41.6 billion) </li></ul><ul><li>Goods & Services Exports: 20.3% of GDP </li></ul>
  17. 17. Australian Market <ul><li>14 th largest economy (GDP) </li></ul><ul><li>4 th largest economy in Asia-Pacific region </li></ul><ul><li>Largest trading partners: China, Japan and U.S. </li></ul><ul><li>Real GDP growth averaged 3.0% annually (2000 - 2010) </li></ul><ul><li>One of the largest global suppliers of raw materials (coal, iron ore, etc) </li></ul><ul><li>7 th largest Foreign exchange market in the world </li></ul><ul><li>Australian dollar is 5 th most traded currency </li></ul><ul><li>Funds management: 4 th largest pool of funds under management in the world </li></ul>
  18. 18. Technology <ul><li>Large agricultural and mineral resources used to fuel technological endeavors </li></ul><ul><li>Shifted to knowledge based economy due to vast improvements in I nformation and C ommunication T echnology ( ICT ). </li></ul><ul><li>9 th most developed ICT infrastructure </li></ul>
  19. 19. Standard of Living <ul><li>2 nd on UN Human Development Index </li></ul><ul><li>2 nd on Quality of Life Index – International Living magazine </li></ul><ul><li>4 th on Legatum Institute Prosperity Index </li></ul><ul><li>4 Cities on World's Most Livable Cities Top 10 list: Melbourne, Sydney, Perth, and Adelaide - The Economist magazine </li></ul><ul><li>2 nd highest Living Standard among G20 countries </li></ul><ul><li>50% of Aussies own stock </li></ul>
  20. 20. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
  21. 21. Monetary and Fiscal Policy <ul><li>Macroeconomic Control </li></ul><ul><li>Finance Ministry: Commonwealth Treasury of Australia </li></ul><ul><li>Central Bank: Reserve Bank of Australia ( RBA ) </li></ul><ul><li>Macroeconomic Objectives: </li></ul><ul><ul><li>Full employment; </li></ul></ul><ul><ul><li>Price stability; </li></ul></ul><ul><ul><li>External balance; and </li></ul></ul><ul><ul><li>Economic growth </li></ul></ul><ul><li>Main Policies: </li></ul><ul><ul><li>Fiscal Policy: Taxation and Government spending </li></ul></ul><ul><ul><li>Monetary Policy: Increase/Decrease Aggregate Demand (AD) and manage inflation </li></ul></ul>
  22. 22. Investments – Financial Markets <ul><li>Major Regional Financial Center </li></ul><ul><li>Vital to Global Financial System </li></ul><ul><li>Australian Stock Exchange ( ASX ): World’s 8 th largest </li></ul><ul><li>2,192 companies listed (October 30, 2010) </li></ul><ul><li>$1.4 trillion in Market Capitalization (October 30, 2010) </li></ul><ul><li>Attractive for merger/acquisition </li></ul>
  23. 23. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
  24. 24. Trade & Investment Relationships
  25. 25. Balance of Trade
  26. 26. Trade Agreements <ul><li>Chile </li></ul><ul><li>New Zealand </li></ul><ul><li>Singapore </li></ul><ul><li>Thailand </li></ul><ul><li>United States </li></ul><ul><li>China (Negotiations) </li></ul><ul><li>India (Feasibility Study) </li></ul><ul><li>Indonesia (Feasibility Study) </li></ul><ul><li>Japan (Negotiations) </li></ul><ul><li>Korea (Negotiations) </li></ul><ul><li>Malaysia (Negotiations) </li></ul>Australia's Free Trade Agreements (FTAs) FTAs under Negotiation or Consideration
  27. 27. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
  28. 28. Economic Indicators (US $) 2006 2007 2008 2009 2010(a) 2011(b) GDP (billions) (current prices) 784.8 953.9 1,056.8 993.2 1,219.7 1,297.8 GDP PPP (billions) 737.0 795.2 830.8 848.9 882.3 924.8 GDP per capita 37,599 44,860 48,630 44,808 54,869 57,662 GDP per capita PPP 35,308 37,398 38,246 38,663 39,692 41,089 Real GDP Growth (% change YoY) 2.4 5.0 2.1 1.2 3.0 3.5 Current Account Balance (millions) -41,457 -58,920 -47,753 -43,781 -29,828 -29,418 Current Account Balance (% GDP) -5.3 -6.2 -4.5 -4.4 -2.4 -2.3 Goods & Services Exports (% GDP) 20.1 19.1 22.4 19.9 22.0 21.5 Inflation (% change YoY) 3.3 3.0 3.7 2.1 3.0 3.0
  29. 29. GDP Growth Rate
  30. 30. Inflation Rate
  31. 31. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
  32. 32. Comparison – General Information, Demographics, Standard of Living Australia Canada New Zealand <ul><li>Area: 2.9 million sq. miles </li></ul><ul><li>Area: 3.5 million sq. miles </li></ul><ul><li>Area: 103,737 sq. miles </li></ul><ul><li>4 th - Prosperity Index </li></ul><ul><li>5 th - Prosperity Index </li></ul><ul><li>7 th - Prosperity Index </li></ul><ul><li>2 nd - Quality of Life Index </li></ul><ul><li>5 th - Quality of Life Index </li></ul><ul><li>9 th - Quality of Life Index </li></ul><ul><li>4 th - UN Human Development Index </li></ul><ul><li>3 rd - UN Human Development Index </li></ul><ul><li>8 th - UN Human Development Index </li></ul><ul><li>4 of world’s Top 10 cities </li></ul><ul><li>3 of world’s Top 10 cities </li></ul><ul><li>1 of world’s Top 10 cities </li></ul><ul><li>Median Age: 37.5 years </li></ul><ul><li>Median Age: 36.8 years </li></ul><ul><li>Median Age: 40.7 years </li></ul><ul><li>Death Rate: 6.81/1,000 </li></ul><ul><li>Death Rate: 7.87/1,000 </li></ul><ul><li>Death Rate: 7.1/1,000 </li></ul><ul><li>Birth Rate: 12.39/1,000 </li></ul><ul><li>Birth Rate: 10.28/1,000 </li></ul><ul><li>Birth Rate: 13.81/1,000 </li></ul><ul><li>Life Expectancy: 81.72 years </li></ul><ul><li>Life Expectancy: 81.29 years </li></ul><ul><li>Life Expectancy: 80.48 years </li></ul><ul><li>Population: 21,515,754 </li></ul><ul><li>Population: 33,759,742 </li></ul><ul><li>Population: 4,252,277 </li></ul>
  33. 33. Comparison – Economic Performance (2010)
  34. 34. Summary 2 <ul><li>Strong performer over past decade </li></ul><ul><li>What makes Australia’s economy strong? </li></ul><ul><li>Demand for commodities; </li></ul><ul><li>Growing ties with China & Leadership in Asia-Pacific Region; </li></ul><ul><li>Low inflation; </li></ul><ul><li>Housing market boom; and </li></ul><ul><li>Strong export demand </li></ul><ul><li>Safe, Stable and Prosperous </li></ul><ul><li>Attractive hub for global & regional business operations </li></ul>
  35. 35. The Future 2 <ul><li>Australia needs to adapt to meet coming challenges while grasping future opportunities </li></ul><ul><li>Flexibility of both labor and capital will be critical to future success </li></ul><ul><li>… as will infrastructure, where under-investment has contributed to capacity constraints </li></ul><ul><li>Needs to successfully navigate the uncertain global economic environment </li></ul>Demographic Transition Climate Change Evolution of Global Economic Landscape <ul><li>Trend in annual total rainfall, </li></ul><ul><li>1970-2007 (mm/10yrs) </li></ul>
  36. 36. Questions?
  37. 37. References <ul><li>ASX Group. (2011). The Australian Market. Retrieved January 6, 2011 from http://www.asxgroup.com.au/the-australian-market.htm </li></ul><ul><li>Australia Development Bank (2010). Fact Sheet. Retrieved December 21, 2010 from http://www.adb.org/documents/fact_sheets/aus.pdf </li></ul><ul><li>Australia Development Bank (2010). Pacific Economic monitor. Retrieved December 21, 2010 from http://www.adb.org/Documents/Reports/PacMonitor/pem-dec10.pdf </li></ul><ul><li>Australia. (2010, September). Retrieved December 2, 2010, from http://en.wikipedia.org/wiki/Australia </li></ul><ul><li>Australia. (2008). Retrieved December 1, 2010, from http://www.cyborlink.com/besite/australia.html </li></ul><ul><li>Australia Economy. (2010). Retrieved December 10, 2010, from http://www.economywatch.com/world_economy/australia/ </li></ul><ul><li>Australian Government, Australian Trade Commission. (2010). Retrieved January 4, 2010, from http://www.austrade.gov.au/ </li></ul><ul><li>Australian Government. (2010). Budget 2010-2011. Retrieved January 5, 2011, from http://www.aph.gov.au/budget/2010-11/index.htm </li></ul><ul><li>Australian Government. (2010). Financial Regulation. Retrieved December 24, 2010, from http://australia.gov.au/search?meta_C_phrase_sand=topics&advancedSearch=false&form=simple&collection=gov_combined&coverage=info&query=financial </li></ul><ul><li>Australian Government. (2010). Law and Justice. Retrieved December 24, 2010, from http://australia.gov.au/topics/law-and-justice </li></ul><ul><li>Australian Government, Department of Foreign Affairs and Trade. (2008, March). Retrieved January 2, 2011, from http://www.dfat.gov.au/facts/people_culture.html </li></ul><ul><li>Australian Government, Department of Foreign Affairs and Trade, Australia in Brief. (2008, June). A stable and competitive economy. Retrieved December 24, 2010, from http://www.dfat.gov.au/aib/competitive_economy.html </li></ul><ul><li>Australian Government, Department of Foreign Affairs and Trade. (2010). Economic Fact Sheets. Retrieved December 24, 2010, from http://www.dfat.gov.au/geo/fs/aust.pdf </li></ul><ul><li>Australian Government, Department of Foreign Affairs and Trade, Australia in Brief. (2008, June). Legal System. Retrieved November 30, 2010, from http://www.dfat.gov.au/facts/legal_system.html </li></ul>
  38. 38. References <ul><li>Australian Government, Department of Foreign Affairs and Trade, Australia in Brief. (2008, June). Trading with the world. Retrieved December 24, 2010, from http://www.dfat.gov.au/aib/trade_investment.html </li></ul><ul><li>Australian Government, Department of Immigration and Citizenship. (2010). Retrieved December 2, 2010, from http://www.immi.gov.au/living-in-australia/choose-australia/about-australia/au-customs/ </li></ul><ul><li>Australian Government. (2010). Financial Regulation. Retrieved January 4, 2011, from http://australia.gov.au/search?meta_C_phrase_sand=topics&advancedSearch=false&form=simple&collection=gov_combined&coverage=info&query=financial </li></ul><ul><li>Australian Government (2008). Study on Intraregional Trade and Investment in South Asia. Retrieved December 21, 2010 from http://www.adb.org/Documents/Books/Intraregional-Trade-Investment/trade-investment.pdf </li></ul><ul><li>Australian Government, The Treasury. (2010). Retrieved December 1, 2010 from http://www.treasury.gov.au/home.asp?ContentID=521 </li></ul><ul><li>Commonwealth Treasury of Australia http://www.treasury.gov.au/home.asp?ContentID=521 </li></ul><ul><li>Digital Inspiration. (2009, June 3). Countries that are least affected by recession. Retrieved November 28, 2010, from http://www.labnol.org/internet/countries-least-affected-by-economic-recession/8814/ </li></ul><ul><li>Doing Business in Australia. (2010). Retrieved December 1, 2010, from http://www.worldbiz.com/australia.html </li></ul><ul><li>Doing Business in Australia: A Short Form – Business Profile. (2010). ASA Consultants. Retrieved November 28, 2010, from http://www.australia-migration.com/page/Business_in_Australia/131 </li></ul><ul><li>Economist Intelligence Report. (2010). Digital economy rankings 2010: Beyond e-readiness. Retrieved January 11, 2011, from http://www.eiu.com/site_info.asp?info_name=The_Global_Liveability_Report&page=noads&rf=0 </li></ul><ul><li>Economist Intelligence Report. (August 2010). Global Livability Report. Retrieved January 7, 2011, from http://www.eiu.com/site_info.asp?info_name=digitaleconomy_2010&page=noads&rf=0 </li></ul><ul><li>Economic System of Australia. (2007). Retrieved January 13, 2010, from http://www.australiaonnet.com/economy-business/economic-system.html </li></ul>
  39. 39. References <ul><li>Guide to Australia. (2010, June 26). Retrieved December 1, 2010, from http://www.executiveplanet.com/index.php?title=Australia </li></ul><ul><li>Human Development Index (HDI) - 2010 Rankings. (2010). Retrieved January 7, 2011, from http://hdr.undp.org/en/statistics/ </li></ul><ul><li>IMD World Competitiveness Yearbook, Switzerland. (2010). Retrieved December 11, 2010, from www.imd.ch/wcy </li></ul><ul><li>IMF articles (2010). Retrieved December 11, 2010, from http://www.imf.org/external/country/aus/index.htm </li></ul><ul><li>IMF Data Mapper (2010). Retrieved December 11, 2010, from http://www.imf.org/external/datamapper/index.php </li></ul><ul><li>IMF: Financial Position in the Fund as of November 30, 2010 (2010). Retrieved October 11, 2010, from http://www.imf.org/external/country/aus/index.htm </li></ul><ul><li>Index Mundi. (2010). Real GDP growth. Retrieved January 16, 2010, from http://www.indexmundi.com/australia/gdp_real_growth_rate.html </li></ul><ul><li>International Living. (2010). 2010 Quality of Life Index: 194 Countries Ranked and Rated to Reveal the Best Places to Live http://internationalliving.com/2010/02/quality-of-life-2010/ </li></ul><ul><li>Reserve Bank of Australia (2010). Retrieved December 11, 2010, from http://www.rba.gov.au/ </li></ul><ul><li>Swire, M. (2010). Doing Business in Australia. Retrieved December 28, 2010, from http://www.lowtax.net/lowtax/html/offon/australia/aus_business.html </li></ul><ul><li>The 2010 Legatum Prosperity Index. (2010). Legatum Institute, United Kingdom. </li></ul><ul><li>Trading Economics: Website for economic indicator by countries. (2010). Retrieved December 29, 2010 from  http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=AUD </li></ul><ul><li>Wikipedia. (2010). Australian Securities Exchange. Retrieved January 6, 2011, from http://en.wikipedia.org/wiki/Australian_Stock_Exchange </li></ul><ul><li>Wikipedia. (2010). G8. Retrieved November 28, 2010, from http://en.wikipedia.org/wiki/G8 </li></ul>

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