Australian Economy over the last two years Essay

Australian Economy over the last two years - Essay Example In the currently globalized world with maximum financial interconnectedness, problems in a particular country’s economy could arise mainly because of negative factors in the world economy. Thus, when the global recession started happening in United States in 2009-2009, it spread to various countries and its negative effects were felt all over the world including Australia. Although, Australia is geographically isolated, it is very much part of the world economy, and so economic recession in United States and Europe had ripple effects in Australia, necessitating the Australian government and the Australian Reserve Bank to initiate various measures. So, this paper will discuss how successful is the Australian Government and the Reserve Bank of Australia in running the Australian economy over the last two years in the immediate aftermath of the economic downturn, particularly focusing on the macro economic policies adopted by both the entities to avert the crisis and importantly to elevate the Australian economy. Australian economy is placed as a developed and modern market economy, with GDP running into more than one trillion dollars. It is also tagged as â€Å"one of the fastest growing advanced economies in the world† even in the times of recession and its aftermath. This can be viewed from the fact that â€Å"Australia is the 13th largest economy in the world according to nominal GDP (current prices) and the 17th largest according to GDP (PPP).† (economywatch.com 2010). The sector which dominates the Australian economy contributing maximum to its GDP is the services sector, around 68% of the GDP. It is followed by agricultural and mining sectors. Thus, it can be said that â€Å"Australia possesses a well-diversified economy boosted by the strength of its services and resources industries.† (economywatch.com 2010). Importantly, the economy grew optimally without slump from the last decade of the last century into the first decade of this 21st century. It grew in the positive figures in 2000’s until, break was placed in the form of global recession. â€Å"The Australian economy grew for 17 consecutive years before the global financial crisis.† (cia.gov 2011). So, in the aftermath of the financial recession, all the sectors had negative impacts, with these sectors particularly the mining sector losing sizable jobs. So, when the Australian economy witnessed a slump in the last two years as a result of global recession, after a continuous period of heightened growth, the government and the Reserve Bank of Australia swung into action, initiating key macro policies in the form of stimulus package and cutting of interest rates to historically low figures. â€Å"Rudd government introduced a fiscal stimulus package worth over US$50 billion to offset the effect of the slowing world economy, while the Reserve Bank of Australia cut interest rates to historic lows† (cia.gov 2011). When one focuses on th e last two years of the Australian economy, it coincided with the rule of Kevin Rudd government, as the regime was in power from 2007-2010. In addition, both the government and the RBI functioned in a coordinative manner regarding all the major decisions impacting the Australian economy. So, the role of the Australian government and RBI cannot be maximally bifurcated and