Australia’s Economic Growth Is Due To Temporary Factors
According the International Monetary Fund, Australia’s economy could expect a stronger performance if recent improvements in trade can boost business confidence and unlock investments. The economic performance of Australia has remained remarkable if compared to other countries; however, there is a downside risk if investment was to stay subdued and company profits remain under pressure for longer.
In the concluding statement of the Australian economic review, if wage growth stays low, consumption growth can be lackluster. It is believed that Australia’s recent growth increase above 3% was due partly to temporary factors. To ensure a return to full employment against a weak global backdrop, the reserve Bank has to keep interest rates low and the Federal Government must boost infrastructure spending.
While unemployment in Australia is relatively low, underemployment and long term underemployment have risen. Nominal wage and inflation have remained weak. According to IMF, low unemployment rates have likely overstated improvements in the labor market and unemployment has risen because 80% of the jobs that were created last year were mostly part-time.
The risk profile of new loans improved because prudential policies have resulted into a tentative stabilization of Australia’s housing vulnerabilities and lending standards have been tightened. Upward pressure on house prices have remained strong in several cities because of the decline in long term interest rates and the continuing strong demand for new homes.
On the other hand, Chris Bowen said that unemployment statistics can be embarrassing for Malcolm Turnbull’s government. This is not the first time that the IMF has raised the red flag on negative gearing and capital gains tax arrangements to encourage household leverage and undermine Australia’s macroeconomic stability. The Turnbull government must stop playing politics and should immediately undertake steps to reform negative gearing and capital gains for the improvement of macroeconomic resilience.
If Australia’s economy improves, people will have money to spend on landscaping their backyards. Landscaping requires the services of tree loppers in Perth to ensure that the process will not be dangerous to the trees and surrounding properties. Tree lopping is an essential part of landscaping because the tree will be molded to a preferred shape and desired look.