Has Australia overcome the hurdle that is the end of the mining boom? Yes i say.
With the global economy gaining momentum, Australia as a commodity based economy is also predicted to flourish with it. IMF has released that global growth to expand to 3.5% from 3.1% and with it, Australian growth is predicted to rise from 2.5% to 3.1% resulting in unemployment dropping from 5.9% to 5.2%. This will result in far less unemployed and increase living standards.
With the global economy expected to gain momentum, the IMF have stated that the acceleration in activity is to be supported by “accommodative monetary policies, supportive fiscal policies or infrastructure investment, improving sentiment following the upturn in commodity prices, and less drag from declining investment in the commodity sector”. There is further good news for the Australian economy being that coal prices are expected to rise by 20%. This is great news for Australia as coal is one of our major exports.
Although this is meant to have positive effects on the global and Australian economy, there are also risks that come along with it.
While there is a chance that economic growth will exceed expectations, IMF economic counsellor Maurice Obstfeld stats that significant risks continue to threaten the medium- term outlook, “One salient threat is a turn toward protectionism, leading to trade warfare.”