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aus govt's role (1 Viewer)
- Thread starter mandalay
- Start date
Hmm, well currently as you know the gap between exports and imports have blown out to the "banana republic" levels, slowing economic growth significantly, and coupled with the interest rate rise.
Although the CAD may look pretty ugly of $15.2 billion or 7.1% of national growth (Gdp), its more of being related to its structural problem of net income deficit and more recently being the strong demand of consumers relative to supply), as well as the high Australian dollar recently. And because Australia's CAD this time is more focused more upon its structural problem rather than its cyclical factors, you may have heard in the news of the Howard government raising the point that they need to lift constraints in "productive capacity" through higher investment in skilled labour and infrastructure to help economic growth as well as the CAD.
So.. um basically in other words, the Aust govt is more of focusing upon fixing the long term factors of the CAD rather than the current short term factors. Also just keep in mind that the high aus exchange rate of about 79 US cents is contributing to the lowering of export competitiveness in Australian industries, hence the need to pump skilled labour into our less efficient export industries, and perhaps into import competing industries as well. You may also want to mention the current terms of trade is not helping as well ( X > M).
Hope it helps..
Although the CAD may look pretty ugly of $15.2 billion or 7.1% of national growth (Gdp), its more of being related to its structural problem of net income deficit and more recently being the strong demand of consumers relative to supply), as well as the high Australian dollar recently. And because Australia's CAD this time is more focused more upon its structural problem rather than its cyclical factors, you may have heard in the news of the Howard government raising the point that they need to lift constraints in "productive capacity" through higher investment in skilled labour and infrastructure to help economic growth as well as the CAD.
So.. um basically in other words, the Aust govt is more of focusing upon fixing the long term factors of the CAD rather than the current short term factors. Also just keep in mind that the high aus exchange rate of about 79 US cents is contributing to the lowering of export competitiveness in Australian industries, hence the need to pump skilled labour into our less efficient export industries, and perhaps into import competing industries as well. You may also want to mention the current terms of trade is not helping as well ( X > M).
Hope it helps..
Adding onto that, the immigrants also spend a higher proportion of their income on imports, as they wish to buy stuff from "back home", which increases our CAD.Airazer said:
So yeah...boo immigrants!
I'm sure your textbook covers most of this no?