Income Distribution.
Sometimes economic growth can primarily benefit a particular group in society because its benefits flow mainly to a particular group, such as shareholders or company executives, rather that flowing more broadly to people through wage increases or improved public services.
Environmental Impacts.
If growth is pursued with little regard to its impact on the environment, it can result in pollution, a depletion of non-renewable energy sources and damage to the local environment.
7.4 Recent Economic Trends.
A market economy such as Australia's is subject to the ups and downs of the business cycle(the general level of economic activity) caused by changes in the level of aggregate supply and demand.
Although the 1990's began with a severe recession, this was followed by the longest sustained level of economic growth on record. At the end of 2000 the economy contracted due to a combination of effects such as intro of GST and interest rate increases, but this slowdown was short-lived. The economy was again growing at a rate above 4% by the end of 2001 and during 2002 econoists were predicting that Aus will be the fastest growing advanced industrial economy in 2003.
Several factors explain Aus's eco performance during the past decade: .
Productivity growth reached record levels, reflecting a payoff of extensive microeconomic reform. Microeconomic reform helped to overhaul many sectors of the economy and to introduce competitive pressures, as well as encourage the takeup of new technologies.
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The RBA's strong focus on maintaning low inflation meant the RBA took quick action to ward off inflationary pressures. This helped to keep economic growth within a sustainable range and to sustain growth for a long period of economic growth.
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Low inflation helped keep Interest rates down, encouraging consumer spending. Consumer spending was also encouraged by large increases in real wages, which businesses were able to afford because of strong productivity growth.