Macroeconomics Essay

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INTRODUCTION
This report assesses the current performance of the Australian economy, and makes predictions for the coming year, 2008.   Our analysis focuses on the domestic economy, on the one hand, and international factors that affect the Australian economy.   The report is divided into two broad sections, reflective of this dual focus.  

We begin our analysis by looking at the current national accounts and balance of payments.   Snapshots of two domestic sectors – housing and the government sector – are provided, as a point of focus for the domestic economy.   We assess specific indicators from both of these sectors, in addition to other indicators to assist in forecasting likely economic performance in 2008.   For the housing market, the indicators used were residential building approvals and housing starts.   Consumer sentiment was used to guide analysis of inflation and interest rates.

Turning to the broader international economic outlook, in the international trade section the economic performance of Australia’s main trading partners and the foreign exchange rate were analysed. The Westpac Leading Index also referred to in our forecasting.

The result of our analysis is the prediction that economic growth will be maintained but at a more moderate rate than the last few years.  




1.DOMESTIC FACTORS
1.1 GDP – National Accounts
Over the past few years, GDP has been steadily rising in Australia, reflecting a strong, growing economy.   The National Accounts for the financial year June 2006 to June 2007 reported a 4.3% increase in GDP, as composed of the following elemental increases outlined in Table 1.  
Fig. 1.   CHANGE IN GDP, JUNE 2006 – JUNE 2007
% change June 06 to June 07
Final Consumption Expenditure
(Consumption + Gov Spending)
3.4
Gross Fixed Capital Formation
(Private and Gov Investment) 11.6
Terms of Trade 6.2
- Exports of Goods and Services 0.8
- Imports of Goods and Services 1.1
Real Net Disposable Income 5.1...

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