The manufacturing output or production in the last three quarters of 2021 saw a decline, and COVID-19 is probably the main reason. In the fourth quarter of 2020, the change was 7.6%, while in the fourth quarter of 2021, it was 3.1%. It is important to note that a rise in manufacturing production results in the economy’s growth, as indicated by gross domestic product. Therefore, the GDP also reduced when the production reduced from 9.3% in the second quarter to 4.7% and 3.1% in the third and fourth quarters of 2021. In this case, a contraction of the business cycle curve is visible (Trading Economics, 2022). With the available information, it is clear that the manufacturing output had the greatest overall contribution.
The country recorded $135.5 billion, $181.4 billion, and $250.6 billion in net exports. When the fourth quarters of 2020 and 2021 are compared, the country improved in that area. Economists identify net exports as one element of aggregate demand. Any change in the former causes a shift in the latter and, thus, impacts the real GDP in the short term. A decrease in net exports reduces aggregate demand and vice versa (Trading Economics, 2022). In the case of China, the exports increased, and thus, an expansion of the curve in the business cycle is visible.
Change in Unemployment Rate
In the last three quarters of 2021, the country recorded unemployment rates of 5.0%, 4.9%, and 5.1% in the second, third, and fourth quarters, respectively. It is visible that the employment sector remained steady over that period, witnessing a 0.1% decrease and a 0.2 % increase later. The type of employment to have changed in this period is in the manufacturing industry. Individuals working in electrical and electronic machinery, as well as equipment, textiles, footwear, and clothing, may have been impacted (Trading Economics, 2022). This is due to the nation’s ability to manufacture and export goods in these areas for a long time.
Change in Inflation Rate
The change in inflation rate in the last three quarters of 2021 can be calculated from the change in producer prices: 4th = [(10.3-6.9)/6.9] * 100, 3rd = [(6.9-10.7)/10.7] * 100, [(10.7–9.7)/-9.7] * 100. The final recordings are 49.3, -35.5, and -210.3 for the fourth, third, and second quarters, respectively. The type of inflation most likely to change was the demand-pull, as it explains how demand can lead to an increase in their prices.
Analysis and Conclusion. Recovery of the Australian Economy
Australia recorded a positive GDP in the last three quarters of 2021 despite the COVID-19 pandemic that affected many countries economically. Three factors identify this phenomenon, including a reduced unemployment rate, improved exports, and a higher inflation rate, in the last three quarters of 2021. The rise in the levels of employment is a reflection of an improved GDP from an increase in the consumer demand for goods and services. Additionally, the rise in exports is an indicator since when goods or services are sold internationally, money is brought into the country and, thus, improves the GDP (Trading Economics, 2022). Lastly, when the GDP experiences growth, it results in inflation.
The depreciation of the AUD compared to the US Dollar in the second and third quarters of 2021 may have been caused by a positive aggregate supply and demand as well as a higher inflation rate. The country recorded positive net exports in that period, which means that the aggregate supply and demand were positive as well. The currency value is dictated by the aggregate supply and demand such that when it is negative, the exchange rate is high, and when positive, it is low (Trading Economics, 2022). Additionally, the increase in the inflation rate may have resulted in depreciation since it is associated with money’s loss of purchasing ability.
Trading Economics (2022) TRADING ECONOMICS | 20 million INDICATORS FROM 196 COUNTRIES. [online] Tradingeconomics.com. Web.