Critically analyse Australia's recent economic growth performance and the impact of higher growth on other economic issues in Australia.
Economic growth involves an increase in the volume of goods and services that an economy can produce of a period of time, and is measured as a percentage increase in the value of goods and services produced in a country in one year. There are both positive and negative effects that come out of economic growth, mainly in relation to living standards, unemployment, inflation, external stability, income distribution and the environment. Recently Australia's economic growth performance has been promising, considerably better than most countries in this unstable time in global affairs.
In the late 1990's the RBA had successfully maintained a sustainable rate of economic growth. Their target was between 3-5 % in which they achieved. This was mainly due to their responsible and carefully planned monetary policy that the RBA carried out over these years that has prevented large fluctuations in the Business cycle. Though the economy and hence, economic growth has experienced a considerable downturn. This is due to a continuing weakness in the international economy. Continuing meaning that though the economy could resist the drag of the major powers to a recession for sometime, the inevitable had to happen. That is with the closer integration of economies the Australian economy had to follow suit with the rest of the world. This is proven when even during the Asian financial crisis Australia continued to grow at 4%, though finally things have caught up and it is now at.
Another reason for the slowdown in economic growth in recent times is the slowdown in housing approvals. Naturally if the houses are getting slower to be approved then of course the number of houses produced in a year can be considerably lower. Why does this make such a difference to economic growth? Because the building industry is such a big influence in the economy that a slight change can affect the overall performance in economic growth.
