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23709 Economics for Management

Assignment Part 2: Individual written memo

You need to write an individual memo of 500 words (excluding the reference list) to report it to CEO that summaries the above-mentioned topic in order to brief your manager on the current Australian economy, including making a forecast on the Australian economy and the cash rate.

Solution

INDIVIDUAL MEMO

Briefings of the Australian Economy and Cash Rate Forecast

It’s not an unknown fact that there are various factors that influence the economy of the country and these consolidated aspects are also the drivers to forecast the economy of the country. In consideration of the Australian economy, it has been witnessed that there are various points that are raising concerns about economic growth. One of them shows that it is majorly influenced due to a decline in household spending leading towards slow growth in the economy. The reason behind this is the normalized purchase patterns of people (BMI Article, 2023). Moreover, the other reasons have been reduced investment and contradictory pressure on the economy. Witnessing these issues it is said that the employment and labour market is being affected due to a decline in the demand resulting in prolonged growth of the economy.

Moving forward previously mentioned points align together showing that the implications of these are posing a potential risk to the economy in coming years. With the delayed growth, there is likely to be a recession arising in the country that will result in increasing unemployment and poverty levels (Trading Economic, 2023). Taking into consideration the previous points it is also a cause of concern that these impacts would together lead towards the global rating of the country, resulting in its decline making it harder for the country to maintain its trade relations.

All of the above-mentioned points have been derived by studying the key macroeconomic indicators as it allows an insight towards the percentage of gap between the actual condition and the perceived condition of the Australian economy. Moving further, the most common reason COVID and the Ukraine War have impacted the country’s economy, is that the reduction in demand and household spending leads to decreased exports and production.

To curb the situation there have been a few proposals and government measures suggested:

  •      The government should arrange fiscal stimulus to overcome the bankruptcy and prevent the investors from losing interest.
  •       Supporting initiatives for job creation and providing employment will allow the country to manage its economy and hence after the Pandemic, it is a must for the government’s focus.
  •       Meanwhile, a similar initiative has been taken by RBA (Reserve Bank of Australia) wherein they have saved 700,000 jobs resulting in a 1.5% economic boost (RBA, 2023)
  •       Analysing the approach of the Australian government it is witnessed that the development of Western Sydney Airport is likely to bring job opportunities to the market.

With further analysis of the trends, it is witnessed that the Reserve Bank of Australia is likely to increase the interest rate to overcome the recession.

In conclusion, it is witnessed that there are various reasons such as Covid, Ukraine Russia war etc. that impacted Australian Economy and to overcome these setbacks Australian Government and RBA are strategizing economic stability.

References

BMI Article, 2023. Australia 2024 Consumer Outlook: Spending Will Slow As Purchasing Patterns Normalize. Online available at: https://www.fitchsolutions.com/ retail consumer- /australia-2024-consumer-outlook-spending-will-slow-purchasing-patterns-normalise-03-10-2023 Last accessed on 22nd October 2023.

RBA, 2023. statements on monetary policy. Online available at: https://www.rba.gov.au/publications/smp/2023/aug/ Last accessed on 22nd October 2023.

Trading Economics. Australian GDP Annual Growth Rate. Online available at: https://tradingeconomics.com/australia/gdp-growth-annual . Last Accessed on 22nd October 2023.

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