How Does A Weak Dollar Affect Australian Economy
National disposable income: This is how much Australians pay for their day-to-day expenses. The figured dropped by 1.1% over last 12 months; this means that employees are being paid less for what they’re producing.
Average weekly earnings: The Full-Time Adult Average Weekly Total Earnings in May 2016 was $1,575.40, a rise of 1.9% from the same time last year (ABS). When average weekly earnings rise, it often means that people increase their buying.
Real growth in GDP industrial …show more content…
Lower inflation rate leads to lower interest rates and lower price/earnings, thus securities look more attractive.
Weak dollar: A weak dollar has a negative impact on the market and the economy as a whole. It makes the Australian markets look lees attractive to foreigner investors. On the other hand, it will make our products more affordable in overseas market, thus it might also have a positive impact on the economy. According to (Newman, 2016) the Australian dollar might fall to 0.50 USD.
Interest rates: As there is low inflation rate, the interest rates are low as well. Lowering interest rates is supposed to make the economy grow faster, it will also make it cheap for business to borrow money to invest in new shops and factories; Lower interest rates on deposits so consumers spend more instead of saving; Lowering the exchange rate so importing is harder and exporting is easier (Murphy, …show more content…
The government has withdrawn from most areas of the market, and competition in sectors such as financial services has increased. Employment is good as always where unemployment rate dropped from 5.7% to 5.6% (Economy.com, 2016), but the part time jobs are dominating. Since inflation rate and interest rate are both low; the economy is supposed to grow faster, it will also make it cheap for business to borrow money to invest in new shops and factories; lower interest rates on deposits so consumers spend more instead of saving; lowering the exchange rate so importing is harder and exporting is easier. GDP and industrial production have experienced an increase and shown a sign of strength and positive impact on the