Market Report on Australia - Essay Example

Vast resource endowment and strong export sector allows the economy to be one of the influential participants in international trade. After the occurrence of the global financial crisis, all financial activities within the economy are strictly supervised that eliminates any chance of unscrupulous financial transaction. However, there are risks associated with this economy due to the easy monetary and fiscal policy implementations. This paper presents a study on the economic prospects of Australia and their effects on the country’s financial market. 2. Economic prospects 2.

1 Recent developments and the present situation Australia is the 13th largest economies in the world in terms of GDP measure. In the Asia Pacific region the country ranks third in terms of GDP after China and Japan. Australia boasts of having one of the most robust national political frameworks among the developed countries in the world. Over the last five decades, the country has developed strong economic institutions in the world and has a very competitive business sector operating internationally.

Recently Australia has been recognised as a continent with a wide reserve of natural resources and it is currently enjoying the position of one of the largest supplier of natural resources and raw materials in the world, such as, coal and iron ore. Steady economic growth in the continent has been aided by this resource boom. Trade in such abundant resource sector accounts for approximately 9.6 per cent of the total economy of Australia. The remainder of the economy is comprised of the construction sector (7.7%), manufacturing sector (9.1%), and financial services sector (11.0%). This distribution depicts that the major sectors in the equity market in Australia are financial services sector with 32% share and natural resources sector with 31% share (Treasury, 2012).

At present Australia enjoys a concrete positive international standing. The largest trade partners of the continent are the United States, Japan and China. Although China is still a developing economy, it is one of the fastest growing economies of the world and competes strongly with the other developed nations. The countries that make the largest amount of investment in Australia are the United Kingdom and the United States. These two countries are also the leading capital markets in the world.

The financial services industry in Australian is well developed and highly-regarded due to its innovativeness. This stems from the fact that the country has one of the world’s most developed capital market. According to the data published by the World Economic Forum, Australia ranks 5th among the countries having most modern financial systems and advanced capital markets in the world. Currently Australia’s equity market has A$1.2 trillion market capitalization (on the basis of free-float market capitalization).

On a daily basis, the average secondary trading extends upto A$5 billion in a normal day. The Australian dollar is one of the most traded currencies in the international market. This shows that the country’s foreign exchange market is quite strong and has high global turnover in this market. 2.2 Economic growth prospects The economy of Australia has experienced high and uninterrupted rate of economic growth over the period of the past ten years. This growth rate has been facilitated by a number of factors, such as, low level of inflation, low unemployment rate, significantly low public debt and most importantly stability in the