2.7 - Factors affecting recent trends in
Australia’s level of economic activity to 2013
1 Our activity has been quite cyclical, goes up and down.
2 Overall Australia’s annual average growth in GDP over this period
was around 3% a year which is in the governments range of 3-3.5%
3 Economic activity has grown 2.5% from 2008-9 to 2012-13
4 The recent influence of
aggregate demand side
factors to 2013?
4.1 Economic activity is changed with different demand
side conditions which affect spending.
4.2 There were three phases in the business cycle over the last few
years that have really affected aggregate demand. They are
mainly because of the GFC.
4.2.1 1. Late 2008-2009 Aus economic activity
slowed dramatically due to the GFC.
International recession occurred within America
which weakened our demand side conditions
resulting in slow spending on locally made
4.2.2 2. Late 2009-10 and 2011-12, there was recovery thanks to
stronger demand side conditions both here and abroad
4.2.3 3. During 2012-13 another slow down hit with mostly weaker
demand side conditions being present.
5 Investigating the specific demand side conditions which
caused changes in the level of economic activity during
5.1 1. Changes in consumer
confidence and business
5.1.1 GFC lead to dramatic decrease in confidence as well
as a rise in household savings
5.1.2 Levels of private consumption and investment
spending decreased, slowing down AD
5.1.3 2008-10-11 we saw confidence soar which boosted AD
and a rise in economic activity.
5.2 2. Changes in disposable income
5.2.1 GFC saw growth slow down
5.2.2 weakening of disposable income meant a weakening of private
consumption and AD. Activity here slumped.
5.2.3 In contrast, 10-11-12 saw more purchasing power come into play lifting economic activity.
5.3 3. Changes in credit growth
5.3.1 Depression of household consumption & business
investment spending occurred in 08-09-10-11.
188.8.131.52 AD and economic activity was low
5.3.2 Accelerated in
11-12 which lifted
AD and boosted the
level of economic
5.4 4. Changes in overseas
economic activity and the terms
5.4.1 effects the value of
which in turn affects
AD and economic
5.4.2 GFC weakened
confidence, spending and
growth among our
overseas trading partners
5.4.3 slowed down
the demand for
our exports and
184.108.40.206 Both of these weakened AD
and slowed economic activity
5.4.4 slowdown in Chine
recently also effects
us with a fall in
commodity prices as
well as our trade
index. This means
there was more
imports than exports
5.4.5 partial recovery of
bolster our salads
in 2011-12 with
trade and lifting
5.5 5. Changes in federal
government policies that
manage the level of
5.5.1 RBA tries to manage the levels of
AD by lowering and increasing
5.5.2 During the GFC the level of economic activity
plunged and it seemed we were going into
220.127.116.11 RBA decreases interest rates to allow people to
have more to spend so we don't go into
recession. They also went to a budget defect so
that the government had money to give out for
people to spend.
5.5.3 2009-10 the policy was removed to slow down the rate of AD
5.5.4 Slow activity in 2012-13 caused the RBA to again reduce
interest rates and switch to a budget surplus
5.6 6. Changes in the rate of population growth
5.6.1 Within a year of the GFC, Aus population dropped by
20% because people couldn't afford to have a family
5.6.2 depressed household consumption and AD which lowered economic activity.