USA is the largest and most advanced economy in the world with positive growth rate of GDP since past decade. In the recent years, it has been experiencing lower but continuous growth rate and features lower interest rate, inflation and unemployment in the economy. This report analyses the economic performance of USA and Australia, two developed nations of the world from the study of the data of major microeconomic indicators of these countries. The data of GDP and its components are collected and analyzed through tables and graphs for this purpose. The impact of the indictors like inflation, unemployment rate and interest rate on growth rate of GDP has been evaluated on the later part through correlation analysis. The correlation analysis of the indicators of Australia and USA shows whether both the countries are having similar trends of growth or not. The report also highlights the type of monetary policies regulated by both the countries in order to controlling inflation and the probable impact of such policies on their future economic performance.
The economic growth of a country depends on the performance of macroeconomic indicators like real GDP, interest rates, unemployment rate, inflation, exchange rate and trade. The real GDP is the foremost important parameter of country’s growth. Gross Domestic Product is calculated on the basis of the overall products and services being produced by a nation within a year in terms of their market value. The major components of GDP are consumption, investment, government expenditures and net exports (Easterly and Levine, R., 2001). The interest rate prevailing in the country determines the rate of savings and investment. A higher rate of interest raises the level savings and hence, will lead to fall in consumption and GDP. The unemployment rate in a country indicates the well being of the economy by measuring the number of involuntary unemployed persons to the total labour force of the economy. The inflation accounts for the increase in the general price level which is known as Consumer Price Index and it can lead to serious impacts on the consumption pattern in the economy (López-Villavicencio and Mignon, 2011). The exchange rate of a country is the value of domestic currency in terms of a foreign currency. It is a major factor in determining a country’s trade position in the global market.The earnings from trade also influences the real GDP of a country, it is one of the component of GDP. This study shows the relation between the GDP and its indictors on the economic performance of the country.
1.0. Data Analysis of Macro-economic Indicators of USA and Australia
The data of real per capita growth rate of GDP of USA and Australia and its major indicators has been analysed from the year 1990 to 2014 to make a comparative study of the two economies. The cross country data has been first shown in a table and then it is represented in a graph to understand the performance gap of both the countries in that parameter (Please refer to Appendix).
The following graphs represent the trends in the GDP growth rate and the macroeconomic indicators of both countries over time.
The above graph shows both the countries have nearly same pattern of growth rate till 2000. After 2000, it has been noticed that Australia experienced higher growth rate compared to USA.