Media Comentary for Econs

Media Commentary

The title of this article is “Australia’s economy has slowed to a crawl, prompting fears we may be slipping into a recession”. I chose this article because I would like to know what kind of policy will the government use to bring the country back to normal trend.

The Australian, 2015, “Australia’s economy has slowed to a crawl, prompting fears we may be slipping into a recession”, viewed on 18 September, http://www.theaustralian.com.au/news/australias-economy-has-slowed-to-a-crawl-prompting-fears-we-may-be-slipping-into-a-recession/story-e6frg6n6-1227511065914

This article is about the economic in Australia in term of unemployment, economic growth and external stability. The finance ministry, Mr. Cormann blamed a decline in exports. Opposition Leader Bill Shorten said that Australia now is having the highest number of unemployed in 20 years which is around 800’000 peoples. With the government spending, it tipped the GDP by 41% for equipment at the end of the year.

Annual growth is now heading for a meagre two per cent, which is below the long-term average of 3% to 3.25 %. The net real disposable income for consumer fall and this affect the standard of living for the consumer. Treasurer Joe Hockey insisted that Australia is luckier than other country such as Canada which has fallen into recession.

The Economic topic that can be related to this article are unemployment, economic growth, external stability. The concepts that can be related to the article are:

1. Economic growth is a sustained expansion of production possibilities measured as the increase in real GDP over a given period of time.
2. Number of unemployed are those 15 years of age or older who are without a job but are actively looking for work.
3. Term of trade is defined as the relationship between the prices which a country receives for its exports and the prices it pays for its imports.
4. GDP is the market value of all final goods and services produced within a nation’s geographic borders during a period of time.

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Based on the article, it stated that the bad weather has caused the export to decrease. When export fall, aggregate demand will fall. Next period of time, firms will reduce output leading to GDP and economic growth to fall as less output is produced. The reason GDP is not zero because of government spending and this shows that government is using expansionary fiscal policy to help the economy. When government spend more, aggregate demand will increase while the firms will also increase output and this lead to more resources needed and GDP increases. Low wages discourages employment and this caused more people to be unemployed. The terms of trade is low as China demand for mineral fell. This cause aggregate demand to fall and the output will fall. Therefore, this can be a reason why unemployment increases because less resources are needed for firm.