Rba Essay Competition 2012
Therefore, the same amount of money will purchase fewer commodities than it would in the periods where the inflation level is lower.
Since the period that there was an economic downturn in the world economy, Australia’s economy has been recovering though unsteadily (ABS, 2012).
This is because if the market value of production in a country is low, the currency will trade at a lower value hence making importation of goods more expensive.
This will result in increased prices of available goods due to the scarcity of these goods.
When using the top-down fundamental analysis, the investor will study the trends starting at the highest level of economic indicators down to the lowest level.
Therefore, this means that they will consider the global indicators such as exchange rates, energy prices and inflation rates, before looking at national indicators such as the nation’s GDP, interest rates, the productivity level in that country.
Assessment of the Australian economy Introduction When investing there is certain factors that the investor should put into consideration to analyze the potential for maximum returns from any investment venture.
The GDP growth rate for Australia has experienced a slowdown due to inflation and the effect of the changes of the world economy on the Australian trading ability, varying at greater proportions than the rest of the world.This process is to ensure that the investor gets into the business with all the facts hence this will enable him to make wise investment decision, focusing on the area with the most promising returns.Since the method being used for the analysis of the viability of investment condition of the Australian economy is the top-down fundamental analysis, the trends in the global economy will have to be studied.The effect of foreign competition on the country’s productivity is also measured.After this, the study is narrowed down to the regional economy in order to find out the most economically viable regions in the country.The business confidence placed in the Australian economy is also volatile.This is because of the inconsistency of the market that is constantly changing as it is affected by interest rates, consumer price index, the availability of credit and money from credit facilities, balance of payment of the country, the exchange rates and banking indicators.The indicators are the country’s economic trend in relation to the world economy, the GDP growth rates, rates of inflation in the country, interest rates offered, and the currency exchange rates in relation to other currencies and the productivity of the country (UBS Investment Bank, 2012).Theses are the factors that determine the performance of the economy of that country in the global world economy.This will result in greater borrowing of loans to invest in the local businesses hence in the short run the inflation will be increased.Firstly, this will be because of the increased prices of the goods in the market and secondly because of the availability of funding from the banks hence there will be increased capital in circulation.