Economic Analysis; The economy will grow at close to its trend rate this year, but it won’t feel like it if you live in the capital city or a manufacturing town of a non-mining state custom essay

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Mining investment key growth driver
PUBLISHED: 04 MAY 2012 13:34:55 | UPDATED: 05 MAY 2012 11:32:21
ALAN MITCHELL
The economy will grow at close to its trend rate this year, but it won’t feel like it if you live in the capital city or a manufacturing town of a non-mining state.

Mining investment in the back blocks of Western Australia and Queensland will be the key driver of growth in the year ahead, while the parts of the economy that most of us see when we look out our windows are likely to be pretty soft.

The Reserve Bank of Australia has revised up its forecast for mining investment because work on projects under construction is progressing more quickly and “some projects previously considered only possible now look more likely to go ahead”.

It now expects mining investment to rise to about 9 per cent of gross domestic product in 2012-13. That compares with a 50-year average of just 2 per cent of GDP.

However, while the big spending mining companies are adding spectacularly to growth, the demand for labour outside the resources sector has been weaker, with a decline in the participation rate keeping the unemployment rate from rising.

Looking ahead, the federal and state governments’ contribution to demand will grow “well below trend”, thanks to fiscal consolidation, and the outlook for residential building has deteriorated.

The conditions necessary for a recovery in housing construction have been falling into place, with mortgage servicing costs falling relative to incomes, the population growing and rental yields rising.

But, according to the RBA, construction activity has remained weak because of job insecurity, weak house prices and tight credit conditions for property developers.

Requires:
The article must relate to one or
more of the topics (chapters) about macroeconomic covered in the lecture program. Topics: 1.GDP, income and economic; 2. aggregate demand and aggregate supply analysis; 3. unemployment and inflation; 4. money, banks and the Reserve Bank of Australia; 5. Monetary policy; 6. fiscal policy; 7. International Trade; 8. Macroeconomics in an open economy. You are to apply your economic theory to explain and analyse the newspaper/media
article. Refer to the ‘An Inside Look’ section at the end of each chapter in the textbook for examples. The
assignment should be approximately 1400-1500 words in length and must include well labelled diagrams. A copy of
the article showing date and source is to be included with the analysis. Complete the assignment cover sheet
and submit with your assignment. It is also very important to discuss the choice of topic/article with your tutor well
before the submission date.
I would suggest that you present your assignment as a report – include an introduction, economic concepts
/theories to be applied, analysis, conclusion and references. Visit the blackboard site for notes on preparing the
assignment. The assignment is allocated for content and analysis (appropriate choice of article, relevant concepts and
depth of coverage, sound application of theory, logical structure)

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