| Economy | 2022 | 2023 | 2024 (forecast) | 2025 (forecast) |
|---|---|---|---|---|
| Australia | 3.7 | 1.5 | 1.2 | 1.6 |
| USA | 1.9 | 2.5 | 1.5 | 1.8 |
| China | 3.0 | 5.2 | 4.6 | 4.1 |
| OECD (excluding Australia) | 2.8 | 1.6 | 1.3 | 1.7 |
Despite strong employment numbers, the Australian economy is grappling with per capita GDP stagnation and weak domestic consumer demand. The Reserve Bank of Australia (RBA) has kept the cash rate at restrictive levels to curb persistent services inflation, while fiscal policy remains constrained by structural spending commitments on healthcare and national defense. Consequently, domestic policy levers offer limited scope to accelerate growth.
Under these conditions, economists highlight the critical role of external trade. A strong rebound in demand from key trading partners could provide a crucial boost. However, the composition of this trade matters. While renewed demand from traditional G7 partners (such as the US and Japan) stimulates Australia's higher-value service exports and inbound tourism, economic growth in China and emerging East Asian nations directly drives Australia's massive resources and agricultural sectors. Extract D concludes that 'Australia's macroeconomic trajectory remains heavily leveraged to the health of its key external trading partners.'
Using the data and your economic knowledge, assess the possible effects on Australia’s macroeconomic performance of an external economic stimulus, whether originating from major Asian trading partners or from traditional G7 economies.
