Analyse the performance of the components (C, I, G & NX) of Australias GDP since 2005 - Essay Example

In the following table the estimates of different components are represented quarter-wise. The data covers the time period from the first quarter of 2005 and the final quarter of 2008. Here the five components are given. The components are: private consumption expenditure, gross private investment, inventory investment and the net export (obtained by subtracting the import from the export of the corresponding year). Private investment is obtained by summing up dwelling investment, buildings and structures investment, equipment investment and other investments.

The inventory investment is obtained by summing up private non-firm inventories and other inventories. In the above figure we can show the rate of consumption growth over different quarters from 2005 March to 2008 December. The growth reached highest in December 2006 and in June 2008 the growth rate in consumption became negative. That implies a decline in consumption. That is perhaps due to the recession due to the global credit crisis. Further the consumption growth revived in the next quarter and then again it showed a decline in the last quarter of 2008.

In the above diagram the trend of the growth of private investment is shown quarter-wise from the first quarter of 2005 to last quarter of 2008. It is found that the private investment became negative in March 2006 and the growth rate became lower than -1% in September 2006. In the next two quarters there had been a sharp rise in the private investment and again it started to decline sharply till December 2007. In the first two quarters there was a rise in growth rate of private investment and again it declined in the last two quarters of the year 2008 i.e. that is the period of global recession.

The above table shows that since the first quarter of the year 2007 Australia has been facing balance of trade crisis. The situation has improved little in the last quarter of the year 2008. That was due to the global