The paper "The Economy of Australia " is a good example of a macro & microeconomics case study. During 1991, the economy of Australia was undergoing a period of recession but soon it saw unprecedented growth in its economy with an expected rate to be 3.7 percent. The growth enabled the Australian economy to 3.7 percent and unemployment to fall from 11 per cent to 5 percent. The growth has long-term beneficial effects on Australia’ s economy as a whole. It also got privileged to have an economic boost from the main trading partner, Japan and the increasing and new markets of China and India gave them a good platform for its exports of raw materials.
The export of minerals and metals in abundant quantity has enabled the Australian Dollar to reach a much stronger position as compared to other nations despite the fact that a deficit is seen in the current account. The increase in the trade deficit is due to its continuous struggle with the industrial sector as compared to its competitive nations. And another challenge in front of Australia is inflation due to labour shortage.
(Economics Help, Online) It is not surprising if it is said that the Australian dollar is the fifth-largest currency in trading in the world. It is after the US Dollar, Euro, Yen, and Pound Sterling and accounts for 2% of total world output. It’ s fifth largest on account of its close ties economically with Asia and its stable economy and to the commodity prices. The future of the dollar as suggested depends on the strength of commodity prices, interest rates and current account deficit.
With the prices on the rise all over the world, investment of dollar would be the best option. With the rise in interest rates and the current account deficit, the Australian interest rate would also rise. But it is also true that on account of the current account deficit, the dollar could be devalued. (Economics Help, Online)To predict the future rate of the Australian dollar as compared to other nations like United States, Euro, Japan, United Kingdom and New Zealand, and to see which of the nation is the best prospect we should compare the current exchange rates in accordance with the models like Purchasing Power Parity (PPP), Fisher effect (FE), Unbiased Forward rate (UFR), technical analysis and Assets markets Approach.
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