In the global framework, one of the most developed economies, characterized by stability and consistency in almost all the parameters of growth is the economy of Australia. The country has been showing consistent growth in the economic parameter, owing to its impressive performance in the industrial and commercial domains. However, in the last few years, this growth has been hampered to a considerable extent, with the primary indicator of economic growth, the Gross Domestic Product, decreasing consistently in the recent period (Bishop et al. 2013).
Trends in economic growth of Australia
In the last few years, the GDP of the country has been seen to be decreasing considerably, which can be seen from the following figure:
Figure 1: GDP of Australia over the last five years
As can be seen from the above figure, the GDP of the country, which slightly increased from 2012 to 2013, kept on decreasing considerably from 2013 to the current period, with the decrease being significantly prominent between 2014 and 2016. The employment scenario of the country has also deteriorated considerably, with the unemployment rate, which was almost zero or negative several years back, increasing noticeably, as can be seen from the following figure:
Figure 2: Dynamics in the unemployment rate in Australia
It is clear from the above figure that the unemployment rate in the country, which was negative or close to zero in the first half of 2012, increased alarmingly till 2015, with the rate falling to some extent but still remaining considerably high in the recent period. This in turn indicates towards the reduction in the number of jobs created in the economy in the recent periods.
The reduction in the overall economic growth rate can be attributed to the withering out of the booming effects of several industries, which the country had experienced over the last few decades. The primary sectors, which have experienced significant growth in the last few decades, were the mining industry, the energy sector comprising of crude oil, ores and natural gas and the housing sectors (Gregory and Smith 2016). The crude oil sector consists of one of the primary energy sectors of the country and forms one of the primary components of exports of the country. However, in the last few years the production of crude oil decreased considerably which can be seen as follows:
Figure 3: Reduction in crude oil production in Australia (2013-2017)
This pattern is also visible in the renewable energy sector of the country in the contemporary period. The investment in this sector, which had been increasing in the last few decades, reduced significantly in the last couple of years due to increased skepticism regarding its future profitability.
Figure 4: Annual investment in the renewable energy in Australia over the years
The fall in the investment from 2010 to 2012 and then a steep decline in 2014 also indicates towards the shrinking in this sector. The total decline in the energy sector’s productivity has also led to a large decline in the employment generation in these sectors, with more than 2000 jobs being lost in the renewable energy sector alone in 2015-2016. This can be accounted for the decline in the pace of economic growth of the country (Parkinson 2018).
From the above discussion, it is evident that, the stably growing economy of Australia has been experiencing a slowdown in its growth, much of which can be attributed to the shrinkage or stagnation in the primary industrial sectors of the country, energy sector being one of them. The loss of productivity, investment and employment generation capacity of this sector can be considered as one of the significant contributors to the slowdown of the economy in the recent years.
Bishop, J., Kent, C., Plumb, M. and Rayner, V., 2013. The resources boom and the Australian economy: a sectoral analysis. RBA Bulletin, pp.39-50.
Gregory, R.G. and Smith, R.E., 2016. 15 Unemployment, Inflation and Job Creation Policies in Australia. Inflation and Unemployment: Theory, Experience and Policy Making, p.325.
Parkinson, G. (2018). Is this the death of Australia’s renewable energy industry?. [online] RenewEconomy. Available at: http://reneweconomy.com.au/is-this-the-death-of-australias-renewable-energy-industry-83477/ [Accessed 30 Jan. 2018].
Tradingeconomics.com (2018). Australia Crude Oil Production | 1994-2018 | Data | Chart | Calendar. [online] Tradingeconomics.com. Available at: https://tradingeconomics.com/australia/crude-oil-production [Accessed 30 Jan. 2018].
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