Introduction
The Australian economy has shown flexibility in tough times like the COVID-19 pandemic. The International Monetary Fund (IMF) stated that the Australian economic growth rate remains at 4.2 percent as of March 2022 (The Australian Economy, 2022). It is projected that the Australian gross domestic product (GDP) will be 6.7 percent larger by the end of 2022 compared to the pre-pandemic period (The Australian Economy, 2022). From a record in March 2020, the employment ratio in 2022 has increased to 64.1 percent, which is an all-time high number (Kondratiev, 2022). The New South Wales state contributes 30.8 percent of Australia’s economy, an enormous contribution to the economy compared to the Northern Territory, which contributes the least (The Australian Economy, 2022). Sydney is the city in Australia with the highest GDP of $86,500, followed by Melbourne, which has a GDP of $72,600 (The Australian Economy, 2022). In the non-metropolitan areas, agriculture is a critical economic source that contributes over 3 percent to the GDP (The Australian Economy, 2022). The fisheries, forestry, and agriculture contribute approximately 13 percent, while the mining industry contributes over 35 percent of the total export revenue (Nguyen, Robinson & Tsiplias, 2022). Australia’s flexible and ever-growing economy, both from the local and international market, has benefited the social landscape positively by ensuring stable jobs for the people, thus reducing unemployment.
Current Economic Conditions
The Australian economy during the March quarter of 2022 indicated growth. It grew by 0.8 percent during the quarter and apparently by 3.3 percent over the past year (The Australian Economy, 2022). In the March quarter, household spending increased, especially in the eastern states; New South Wales by1.9 percent, the Australian Capital Territory by 3.0 percent, and Victoria by 2.7 percent (The Australian Economy, 2022). During this same period, the unemployment rate was recorded as 3.9 percent, the lowest in the last 39 years (The Australian Economy, 2022). After the ease of travel restrictions imposed due to the ongoing pandemic, people started traveling, thus increasing the funds from the transport industry to about 60.0 percent (Kondratiev, 2022). Rising prices from local and international markets benefitted the Australian economy; mining profits rose by 14.7 percent (Nguyen et al., 2022). Australia’s terms of trade rose to a record 5.9 percent during this quarter due to the rising global prices, thus increasing the share of the national income to a record-high profit of 31.1 percent (Kondratiev, 2022). The June quarter is expected to record some uncertain findings with unplanned occurrences like the ongoing conflict between Russia and Ukraine taking the course.
Impact of the Mining Industry on the International Economy
Australia is a trade-exposed economy that relies on exports to be economically stable. A slight change in the export demand from other countries can negatively affect the economy. Australia and China have had long-term relations in the international market. China continues to grow population-wise, leading to investment in infrastructure, urbanization, and growth in manufacturing. Australia being near and well placed to meet the demands, is ready to make the trade with China. The bulk of Australia’s exports to China is made up of coal, gas, and iron ore from the mining industry (Nguyen et al., 2022). Australia is China’s fifth-biggest export supplier and the sixth-largest partner, with 13 percent of the exports being coal and most being ores, slag, and ash (Kondratiev, 2022). During the 2021 financial year, China’s imports from Australia were valued at $116.82 billion (Nguyen et al., 2022). The mining industry is the pillar of the Australian economy as the gross value added over the last decade is estimated to be in hundreds of billions from exports alone.
Performance
The mining industry is the leading and largest economic contributor to the growth of Australia’s economy from the international market. From the 2020-2021 financial year, the Australian mining industry recorded an export revenue that exceeded $300 billion for the first time (Kondratiev, 2022). In 2021, China bought many products from Australia compared to the previous year. The value of the exports jumped to over 180 billion Australian dollars, indicating an increase of about 24 percent (Nguyen et al., 2022). In a month, the data records an increase to 19.4billion, a record high compared to the previous year (Kondratiev, 2022). The rise in export income is heavily attributed to the demand for iron ore, a highly dependent mineral for China. Coal has been in the spotlight since China’s restriction in 2020 (Nguyen et al., 2022). Australia managed to divert the product to other countries like India and South Korea, to prevent economic downfall due to the lack of market from China.
Strength
The mining industry is a crucial component in the success of the Australian economy. Apart from the high income generated from the sales made to China and other foreign countries, it includes an increased foreign direct investment (FDI) (Nguyen et al., 2022). In 2019 the FDI was 375.8 billion Australian dollars and 360.4 billion Australian dollars in 2020 (Kondratiev, 2022). In 2020, this figure accumulated to over 35.1 percent of the FDI, one-third of the total (Kondratiev, 2022). The mining industry has been at the top in the gross value added (GVP) sector, accounting for over 9 percent of the total GVA (The Australian Economy, 2022). Over 278,800 persons get employed in this industry, accounting for approximately 2.1 percent of the total workforce in Australia (Nguyen et al., 2022). In the last five years, the employment rate within this industry has increased by 30 percent (Nguyen et al., 2022). The international market for the minerals from Australia has facilitated other things besides creating employment and investments. They include the development of high technology to help in the mining industry, innovations, and funding of other local projects.
Prospects
The Australian mining industry’s possibility to grow is highly expected in 2022. In the 2021 record, mining exports from Australia reached an all-time high of $300 billion (Nguyen et al., 2022). The number is expected to rise to approximately $379 billion in the current year (Nguyen et al., 2022). It will be possible with support from selling critical minerals like copper, gold, coal, and iron ore. Battery minerals such as nickel and lithium are also on the rise, with high demands from China though the mineral can be acquired from other nations. The mining industry is well-positioned for future growth, with over 250 projects developed to facilitate this achievement (Kondratiev, 2022). With the increased demand for iron ore, thermal, and coking coal from China, it is expected that China will invest in the mining industry in Australia to facilitate production (Nguyen et al., 2022). As high demands for the local produce get inquired by China and other countries, the Australian commodity exports are expected to continue rising to remarkable heights.
Problems
In Australia, the mining industry faces some challenges affecting its smooth growth. Access to power is an issue since the mines’ life cycle is decreasing, thus making it financially appropriate to construct permanent power infrastructures (Kondratiev, 2022). China has plans to reduce the number of carbon emissions, thus making the trade of coal from Australia unlikely. The move is to reduce the emission’s environmental impact and target more sustainable practices like renewable energy. Unstable commodity prices for the mined products in Australia make it hard for companies to plan future expenditure or income (Nguyen et al., 2022). Without the mining industry’s ability to adapt and change in the face of suspicion, the sector will likely fail in the future. There are hazards related to the industry, especially when the mines get more profound, as they can collapse and cause death or severe injury.
National Macroeconomic Policy
The Australian government has several macroeconomic policies that economic policymakers formulate. They are formed to minimize inflation, maintain low rates of unemployment and maintain a real GDP growth that is positive and constant (Prihadyatama & Kudhori, 2022). Key macroeconomic indicators showing a stable economy include GDP, exchange rates, unemployment rate, tax systems, and price fluctuations (Prihadyatama & Kudhori, 2022). Since the country engages in trade with countries like China, exchange rates influence the economy. The monetary policy set by the Reserve Bank of Australia controls the supply and demand of money within the economy, thus stabilizing and growing the financial system (Prihadyatama & Kudhori, 2022). Fiscal policy influences the economy through the government budget, which is announced yearly in May.
Impact of the Economic Conditions on the Social Landscape
The economic landscape, which includes the economic activities that humans participate in, impacts the social landscape. They have trans-regional geographical settings, environmental conditions, and natural resources, which provide the basis for economic growth in Australia (Bruce & Hidding, 2022). Australia’s stable and growing economy has made it possible to invest in other areas that can benefit the people. The economic conditions have resulted in the government facilitating sustainable development, with the creation of jobs being a priority to eradicate poverty in Australia (Bruce & Hidding, 2022). With employment, good wages and benefits for all employees are championed, thus ensuring workers are not overworked or underplayed. Secondly, the government invests in the health system, which positively benefits society, thus impacting the social landscape. There is a record plan to raise funds to $132 billion in 2022 and over $537 billion over the next four years (Bruce & Hidding, 2022). The government funds healthcare systems in Australia to provide high-quality care for the citizens where and when they need it, thus enabling them to live a healthy life.
Conclusion
The Australian economy has been recording growth over the years due to the high number of export trades made to China and other Asian countries. During the recent March quarter, Australia’s economy increased with household spending rising in three central states, the New South Wales, Australian Capital Territory, and Victoria. Major exports to China are from the mining industry, including ores, slag, and ash. The mining industry is the leading exporter of goods from Australia, thus generating the most income. Employment opportunities have been created through the industry, and multi-billion investments have been made, thus benefiting citizens. Investments ensure the sector is stable and financially able to continue the production of the minerals. With a high demand for minerals by China and other Asian countries, the industry is projected to grow in the following years. Problems faced by this industry include unstable market prices and banning some minerals like coal from potential buyers like China, who embrace renewable energy. The government implements fiscal and monetary policies to facilitate the economy’s growth. Economic conditions impact the social landscape by creating employment and funding health systems, thus benefiting society positively.
References
Bruce, T., & Hidding, M. (2022). Economic benefits of improving precision. TOS Forum, 2022(11), 79. Web.
Kondratiev, V. (2022). Australian mining industry: Positions and perspectives. Mining Industry Journal (Gornay Promishlennost), (1/2022), 91-102. Web.
Nguyen, V., Robinson, T., & Tsiaplias, S. (2022). The Australian economy in 2021–2022: The virus strikes back. Australian Economic Review, 55(1), 5-24. Web.
Prihadyatama, A., & Kudhori, A. (2022). Macroprudential policy, financial crisis, and macroeconomic policy (case study in 5 Asian Countries). Journal of Economics and Sustainable Development, 13(7). Web.
The Australian Economy. (2022). Twelve things that happened in the Australian economy in the March quarter of 2022. Australian Bureau of Statistics. Web.