Executive Summary:

经济学essay代写 In this paper we will discuss about the possible impact of Brexit on the Australian economy. As UK is a ···

In this paper we will discuss about the possible impact of Brexit on the Australian economy. As UK is a major trading partner of Australia . Brexit will slow down the growth prospect of UK and European economies as well. Hence we can expect that will reduce demand for Australian export . And flow of UK FDI to Australian economy as well. 经济学essay代写

This will be going to reduce Australian growth rate. Hence as the central bank of Australia.The Reserve Bank of Australia should follow expansionary monetary policy . And would reduce cash rate or interest rate to boost investment in the domestic economy. In this manner there will be higher aggregate demand and higher growth rate in the Australian economy.

Impact of Brexit on Australian economy 经济学essay代写


We know that Bretain has left European Union and the most impactful event is known as ‘Brexit’. As London, the capital of Bretain is the financial capital of the world economy . We can expect that Brexit would have large amount of short run and long run influence on many economies. However in this paper we will consider the impact of Brexit on the Australian economy.

Here we will see that Brexit will impact the immigration of Australian skilled workers to Bretain. We will also analyse how Brexit will affect aggregate expenditure or aggregate demand of the Australian economy . Because that will actually lead to economic growth or economic recession in the Australian economy (Hutchens, 2016).

Depending upon the overall growth and economic scenario of the Australian economy . We can advise on the correct approach of central bank of Australia towards its monetary policy and cash rate movement.

Aggregate Demand condition of the Australian economy: 经济学essay代写

Aggregate expenditure function of an economy equalises to the aggregate demand function of the economy. Aggregate demand is considered as the sum of Consumption expenditure (C), private investment expenditure (I), Government expenditure (G) and net exports (NX, which is the difference between exports and imports). The growth in aggregate demand can be considered as economic growth of an economy (“Domestic Economic Conditions – Statement on Monetary Policy – August 2016”, 2016).

To analysis the impact of Brexit on the Australian economy we will first analyse the domestic economic condition of Australian economy. In the economy we can see lower level of interest rate by Reserve Bank of Australia. Since the first quarter of 2016, we can see stable growth in the household demand . And growth in consumption expenditure has been due to the employment growth, growth in household income coupled with stable growth in household wealth level.


However mining investment has been low recent years. 经济学essay代写

We can see that unemployment rate has been steady at the rate of 5% which reassures the improved labor market condition. Due to lower interest rate and higher prices . In the housing sector we can see construction of high-density houses . And retail sales have also been increased in recent years (“Domestic Economic Conditions – Statement on Monetary Policy – August 2016”, 2016).

In case of private business investment we can see downward trend recent years . And the fall is attributed to lower growth in investment in engineering and construction sector. However mining investment has been reduced by 45% since 2012 (peak time of growth in investment).

The Non-mining sectors like education, agriculture, health care and software development had also been reduced . During the recent phase and this trend is specially can be seen in resource rich states like Queensland and Western Australia. However continuous phase of lower interest rate and depreciation of Australian dollar is expected to revive the investment scenario (“Domestic Economic Conditions – Statement on Monetary Policy – August 2016”, 2016).

In the external sector we can see that there has been modest growth in resource and service export. 经济学essay代写

Due to the increased production of Liquidified natural Gas (LNG), higher amount of export of LNG is expected in the future. Higher export growth of iron ore (due to lower production cost of iron producers and the resultant competitive advantage in the world market) . And coal will increase export overtime.

In case of import we can see lower demand and this is expected to increase net export in coming years. The depreciation of Australian dollar has also provided a boost to Australian export (“Domestic Economic Conditions – Statement on Monetary Policy – August 2016”, 2016).

The Australian government has assured to maintain budget deficit in recent year  . And in 2016-17 it will be around 3% of GDP (Gross Domestic Product). Considering all these aspects we can say that the Australian economy is in the expansionary phase where modest rate of economic growth can be witnessed.

Impact of Brexit on Australian Trade and Investment: 经济学essay代写

Due to the incident of Brexit, The UK and European economy as a whole will be going to suffer. The UK economy will be likely to experience slower economic growth during next couple of years. As UK is the main source of financial capital, the growth process of the entire European economy will suffer. The lower amount of growth in the UK and European economy will adversely impact the consumption, investment, employment aspects of those economies. (“BEYOND BREXIT: POTENTIAL IMPLICATIONS FOR AUSTRALIAN TRADE AND INVESTMENT”, 2016).

We know that UK, European economies and Australia have been trading partners for decades. Demand for Australian exports by UK and European economies will be going to reduce in the short run. Hence net export in the Australian economy will be going to reduce. Apart from that due to lower growth in the world economy on account of Brexit . Will reduce growth prospect of Australian economy as Australian dollar will be going to lose competitive advantage in the international market.

We know that London is the important financial capital 经济学essay代写

And Brexit will adversely impact on its financial stability. This will cause lower amount of investment (Foreign Direct Investment, FDI) in the Australian economy. As FDI will reduce, the production and employment growth prospect . In the Australian economy will be reduced as well and that will reduce Australian aggregate demand and growth rate in the future (“BEYOND BREXIT: POTENTIAL IMPLICATIONS FOR AUSTRALIAN TRADE AND INVESTMENT”, 2016).

In the above paragraph, we have discussed the short run impact of Brexit on the Australian economy. However the longer term consequences would be greater. Before Brexit, UK is provided with free trade facilities with European economies and due to Brexit . UK is now subjected to import tariff and quotas. Before Brexit UK got the facility of trading into the single European market and also got a significant share of FDI from Europe. It could access European Economic Area.

After Brexit we can anticipate that all kinds of administrative trading cost of UK is going to increase further. As UK is the seven largest trading partner of Australia and eight largest export market . In the long run Australia’s bilateral trading agreement with UK will be going to adversely affected. During the phase of 2000 to 2015 we can see that share of total export volume of Australian economy to UK economy was in the range of 12
% to 7%.

In 2015 经济学essay代写

Australian export to UK for the financial service was around 22% of total export . Followed by personal travel and education, business travel and telecommunication and information technology (“BEYOND BREXIT: POTENTIAL IMPLICATIONS FOR AUSTRALIAN TRADE AND INVESTMENT”, 2016).

During the phase of 2001 to 2015 . We can see that UK FDI to Australia was around 21% to 10% which was around Australian dollar 70 billion to Australian dollar 35 billion. Hence UK FDI to Australian had reduced considerably while Australian FDI to UK economy was around the range of Australian dollar 60 billion to 50 billion (“BEYOND BREXIT: POTENTIAL IMPLICATIONS FOR AUSTRALIAN TRADE AND INVESTMENT”, 2016).

Due to the lower expected growth in the UK economy (due to Brexit) . Flow of FDI from UK economy to Australian economy will be significantly reduced and lower demand of export of Australian economy will be going to reduce as well. Hence we can expect that Brexit would reduce the growth prospect of Australian economy in recent years in terms of lower investment growth and growth in net export (“BEYOND BREXIT: POTENTIAL IMPLICATIONS FOR AUSTRALIAN TRADE AND INVESTMENT”, 2016).

一个经济体的总支出函数等于该经济体的总需求函数。总需求被认为是消费支出(C),私人投资支出(I),政府支出(G)和净出口(NX,即进出口之间的差额)之和。总需求的增长可以被视为一个经济体的经济增长(“国内经济状况-货币政策声明– 2016年8月”,2016年)。
为了分析英国退欧对澳大利亚经济的影响,我们将首先分析澳大利亚经济的国内经济状况。在经济中,澳大利亚储备银行的利率水平较低。自2016年第一季度以来,我们可以看到家庭需求稳定增长,消费支出的增长归因于就业的增长,家庭收入的增长以及家庭财富水平的稳定增长。但是,近年来采矿投资一直很低。我们可以看到失业率一直稳定在5%,这确保了劳动力市场状况的改善。由于较低的利率和较高的住房价格,我们可以看到近年来高密度房屋的建设和零售额也有所增加(“国内经济状况-货币政策声明– 2016年8月”,2016年)。
如果是私人企业投资,我们可以看到近年来的下降趋势,而下降的原因是工程和建筑领域投资的增长下降。但是,自2012年以来(投资增长的高峰时间),矿业投资已减少了45%。在最近阶段,教育,农业,医疗保健和软件开发等非采矿业也有所减少,这一趋势在昆士兰州和西澳大利亚州等资源丰富的州尤为明显。然而,较低的利率和澳元贬值的连续阶段预计将恢复投资情况(“国内经济状况-货币政策声明– 2016年8月”,2016年)。
在外部部门,我们可以看到资源和服务出口一直在适度增长。由于液化天然气(LNG)的产量增加,预计未来LNG的出口量将增加。铁矿石的出口增长较高(由于铁矿石生产商的生产成本降低以及由此产生的世界市场竞争优势)和煤炭将增加出口超时时间。如果是进口,我们可以看到需求下降,预计这将在未来几年增加净出口。澳元贬值也促进了澳大利亚的出口(“国内经济状况-货币政策声明– 2016年8月”,2016年)。
%至7%。 2015年,澳大利亚对英国的金融服务出口约占总出口额的22%,其次是个人旅行和教育,商务旅行以及电信和信息技术(“超越英国脱欧:对澳大利亚贸易和投资的潜在影响”,2016年)。

Forecasting of Cash rate depending upon the previous movement of cash rate: 经济学essay代写

(source: (“http://www.rba.gov.au”, 2016)

Considering above aspects we can say that ··· 经济学essay代写

Brexit will reduce growth trajectories of the Australian economy . And for this reason aggregate demand and aggregate expenditure of the Australian economy will be reduced. Lower amount of FDI investment and net export will reduce domestic consumption expenditure of the Australian economy . And that will increase unemployment rate and lower income growth. Hence there will be a possibility that the Australian economy will be in the phase of recession.

In the above diagram we can see that cash rate have been on downward trend since the beginning of 2016. Due to the possibility of Brexit, the Reserve Bank of Australia had continued reduction in cash rate . And depending upon the possible recessionary phase of the Australian economy (due to long run adverse impact of Brexit) we can expect that till the end of 2016 cash rate will be reduced.

英国脱欧将减少澳大利亚经济的增长轨迹。 因此,澳大利亚经济的总需求和总支出将减少。 FDI投资和净出口的减少将减少澳大利亚经济的国内消费支出。 这将增加失业率并降低收入增长。 因此,澳大利亚经济有可能进入衰退期。

在上图中,我们可以看到自2016年初以来现金利率一直呈下降趋势。由于英国退欧的可能性,澳大利亚储备银行一直在继续降低现金利率。 并且,根据澳大利亚经济可能陷入衰退的阶段(由于英国脱欧的长期不利影响),我们可以预期到2016年底现金利率将降低。

Forecasted cash rate till the end of 2016:

Time period Target cash rate (in %)
August, 2016 1.5
September, 2016 1.5
October, 2016 1.5
November, 2016 1.25
December, 2016 1.25

As the central bank of the Australian economy it is advisable for the Reserve Bank of Australia to reduce its interest rate (cash rate) further. If the interest rate will be low, cost of borrowing in the Australian economy will be reduced and that will enhance the investment prospect of the economy.

Higher investment growth will enhance production and employment prospect . And for this reason there will be higher aggregate demand and moderate level of inflation. Lower rate of interest will also cause further depreciation of Australian dollar . And that will help Australian export to regain competitive advantage in the international market (“Monetary Policy”, 2016).

Conclusion: 经济学essay代写

Considering the above aspects we can say that Brexit will adversely impact the growth trajectory of Australian economy . May be it will be in terms of lower immigration or may be in terms of lower FDI. Hence there will be possibility that the Australian economy will suffer from the recessionary phase. In this context the best way for the Reserve bank of Australia is to follow expansionary monetary policy (reduce cash rate) to boost aggregate demand as that will expand the possibility of economic growth further.




References 经济学essay代写

Hutchens, G. (2016). Brexit and Australia: what would be the consequences if Britain left the EU?. the Guardian. Retrieved 27 August 2016, from https://www.theguardian.com/australia-news/2016/jun/23/brexit-and-australia-what-would-be-the-consequences-if-britain-left-the-

Domestic Economic Conditions – Statement on Monetary Policy – August 2016. (2016). Reserve Bank Of Australia.


Monetary Policy. (2016). Reserve Bank Of Australia.

http://www.rba.gov.au. (2016). Retrieved 28 August 2016, from http://www.rba.gov.au/statistics/cash-rate/