HSC Stuff > HSC Economics
Minute Statistics
hermansia12 :
31st October, Monday 2016
Ultra-Low Interest Rates:
-Lowering the interest rates -> Stimulates the economy but can also increase risk taking
-Government bonds as the “benchmark of risk-free return”
-The longer the rates stay at such a low level -> Further risk of inflating prices which could lead to sharper correction when the interest rates rise (Causing a bubble esp. in housing prices)
-Low rates -> Less savings as there is less return; harder to finance productive investment
-“If sustained over the next couple of years, negative and low interest rates will challenge financial institutions’ business models and stability” -OECD
Migrants and growth of economy:
-Aus. Has weak regulation with employers who hire migrant workers -> higher chance of being exploited
-Immigrants have led to an increase in nation’s population growth (more than 50% of Aus. Population growth) -> 25% of workers in Aus. Born in another country
-Immigrants increases labour productivity, decreased structural unemployment (by bringing skills which are difficult to find in Aus.)
The attached image gives a summary of the current industries and areas of concern in each state:
WA – Unemployment rising due (at 6.3% in September 2016 increased from the decade average of 4.5%) to the slowing down of the mining construction boom, falling consumer spending in retail
NSW- Population growth to dampen economic growth in the long term
Articles summarised:
http://www.smh.com.au/business/comment-and-analysis/why-ultralow-interest-rates-are-on-the-nose-20161027-gscpf4.html
http://theconversation.com/australia-is-at-risk-of-losing-migrants-who-are-vital-to-the-health-of-our-economy-67455
http://www.watoday.com.au/wa-news/fading-mining-boom-makes-western-australia-the-countrys-worst-economy-20161024-gs98no.html
hermansia12 :
1st November, Tuesday, 2016
BREAKING NEWS
Good luck to all HSC Economics students!!!! Wishing them all the best in their exams :)
hermansia12 :
1st November, Tuesday, 2016
Tourism
-Natural beauty of Aus. Coastline, outback, landmarks (Sydney ranking top 25 global destinations) makes Australia a major lure to visitors
-Country needs to improve tourism services industry (Hotels and resorts) to capitalise further in this industry
-Not obvious that Australia has comparative advantage -> Make ourselves more competitive in the tourism industry -> Fiscal and microeconomic policies needed to drive industry
-Expected to become Aus. Biggest export sector (predicted to earn about $70 Billion in 2025)
-Services is our biggest industry sector accounting for 60% of Aus. output
Last Minute Stats. summary:
-Economic growth 3.3%
-Inflation at low 1% (Below target band of 2-3% required for growth)
-Cash rate at all time low 1.5%
-Unemployment rate at 5.6%
-Exchange rate: $0.76AU = $1US
-Household savings increased by about 10% since 2000
Articles and statistics summarised:
http://www.smh.com.au/business/holiday-in-australia-chinese-tourists-would-rather-go-to-russia-20161027-gscqbt.html
http://www.rba.gov.au/snapshots/economy-snapshot/
hermansia12 :
7th November 2016, Monday
Elections cast doubt over assumptions on tax reform
- Tax reform are not easy to enact politically
- Recent governments proposing increase in GST tax, reduce the rate of company tax by 5% to 25%, starting at smaller businesses, reducing income tax to top 20% of tax payers, tobacco excise
- This could increase the income inequality as lower income earners must spend a bigger portion of their income with increased GST
- Expensive tax cuts (even though it is small) is popular -> Increase votes
- Limitation of Fiscal Policy: Governments may be unwilling to propose unpopular reforms especially with unstable popularity
Ross Gittins’ comment of the Budget:
- Budget repair slower than expected -> Tax collections have grown more slowly
- Revenue forecasts repeatedly fallen short due to fall in export prices
- Wage inflation slow down since 2014; Decreasing by 0.4% to 2.1% in 2016 (Less income tax revenue)
- “If… the Senate accepts the tax increases but declines to pass the company tax cut on to big business … the budget should be well ahead on the deal”
Coal Rally:
- China aiming to reduce overcapacity and make its coal industry more efficient
- Production cuts lowering output by approx. 10% in first 9 months
- Tightness in prices decreasing; cutting spot prices -> Lower prices on coal
- Increases Demand due to correction in prices
- Glencore (Aus. Company-> cut 50, 000 jobs in 2015) plans to reopen coal mine in Aus. Next year but output is not expected to boost its overall sales
- Lower unemployment by creating jobs
Articles summarised:
http://www.smh.com.au/business/the-economy/elections-cast-doubt-over-assumptions-on-tax-reform-20161104-gshx08.html
http://www.smh.com.au/business/the-economy/how-to-fix-the-budget-without-really-trying-20161105-gsipy5.html
http://www.smh.com.au/business/mining-and-resources/coal-rally-challenges-chinas-effort-to-revamp-industry-20161104-gsinlv.html
hermansia12 :
9th October, Wednesday
Economy without Growth
-Productivity Commission “Justified global anxiety that improvements in productivity and the growth in national income have slowed”
- Economic Activity: annual production of goods and services (Aggregate demand and supply)
-Should be growing with the population, productivity should be growing
- Slowed by Aus. Lack of technological advance (i.e needs more infrastructure and capital equipment for further growth)
-Economist Robert Gordon “Slowdown in measured productivity improvement because there is less innovation than we became used to over the past century”
-But, may be unhealthy to pursue economic growth and productivity blindly; Loss in family ties as work becomes more mobile, longer shifts less leisure (Could see a degradation in quality of life)
RBA Snapshot trends against Last Month
-Inflation increased by 0.3% to 1.3% -> Tax Excise could contribute to this rise as well as increased spending due to seasonal event of Christmas
-Services sector output improved by 1% of total output over the past month; (now 59%)
-Becoming more competitive in this regard -> Increase aggregate supply -> Contribute to Economic growth
-Exchange rate has fallen further by 0.002 US cents; Could be due to lack of confidence with recent RBA reconsideration of the cash rate
- RBA maintains the cash rate at all time low of 1.5% -> Forecasted economic and inflation growth
Articles summarised:
http://www.smh.com.au/comment/an-economy-without-growth-is-far-from-our-biggest-worry-20161107-gsk817.html
http://www.rba.gov.au/snapshots/economy-snapshot/
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