Australia has registered a remarkable economic growth unmarred by economic downturn for the past 25 years. This nation has an open economy with minimal limitations on the importation of goods and services. The country has plenteous and diverse natural resources that have drawn a substantial amount of foreign direct investments, and it is net exporter of energy, food and natural resources such as iron ore (Central Intelligence Agency (CIA), 2017). Australia is rated fifth globally based on the economic freedom exhibiting that the government permits significant autonomy in the economy. The service sector is essential to this economy as it contributes 70% to the Gross Domestic Product and 75% of the employment. Furthermore, Australia performs an important role in the World Trade Organization (WTO), the G-20, Asia-Pacific Economic Cooperation (APEC), and other trade arrangements. The major trading partners of Australia include China, South Korea, Japan, United States and India (Department of Foreign Affairs and Trade, 2016).
Singapore has a well-developed and a thriving free-market economy. The country enjoys outstandingly open and a corruption-free setting, stable prices, low unemployment and higher GDP per capita than most of the advanced economies. This economy relies significantly on exports such as consumer electronics, pharmaceuticals, and information technology products (Central Intelligence Agency (US), 2017). Unlike Australia that was untouched by the 2008-2009 global financial crises, Singapore experienced a recession during the Great Depression of 2009. Its economy declined by 0.60% (World Bank, 2017). Despite this decline, the Singapore’s managed to pick up very fast and registered an impressive growth of 15.24% in the year 2010. This country is ranked second internationally based on the economic freedom showing that government provides a high level of autonomy in the economy. Moreover, the government is restructuring the economy reducing reliance on foreign labor and addressing productivity issues. Like Australia, Singapore has formed trade agreements with other nations across the world. It trades with countries such as China, Japan, South Korea, India and New Zealand (GlobalEDGE, 2016).
The rate of variation in the real Gross Domestic Product of a country is usually referred to as economic growth, and it is the best measure of trends in the economy. By assessing the annual deviations in the Gross Domestic Product, an individual can comprehend whether the economy is growing, declining or stagnant (McTaggart et al., 2015, p.59).
The Gross Domestic Product involves the market value of the entire goods and services produced in a country during a specified period. It is a broad gauge of economic growth and a critical indicator of the well-being of a country’s economy in short run and over the long term (McTaggart et al., 2015, p.61). Between 2011 and 2016, both Singapore and Australia have recorded a positive annual economic growth though there are variations from one year to another. Despite constructive economic expansion recorded by both countries, Singapore has had relatively high economic progress in 2011, 2012, 2013 and 2014 compared to Australia. In 2011, Singapore’s economy grew by 6.21% while that of Australia expanded by 2.38%. In 2012 these countries registered almost same economic growth though that of Singapore was slightly higher. Singapore’s and Australia’s economy grew by 3.67% and 3.63% respectively (World Bank, 2017). In the recent years, 2015 and 2016, the economic expansion of Australia was slightly higher than that of Singapore. For instance, in 2015, Australia’s and Singapore’s economy expanded by 2.24% and 2.01% respectively.
GDP per capita is a gauge of a country’s economic performance for each person. GDP per capita divides the Gross Domestic Product of an economy by its entire population. As a result, this measure avails exceptional assessment about the living standards of persons in a country. Furthermore, the GDP per capita is a useful tool when comparing different nations as it reveals the relative performance of an economy. A rise in the GDP per capita displays development in the economy and tends to depict an improvement in the productivity (Goodwin et al., 2014, p.68). Although Singapore has had relatively higher economic growth than Australia, statistics from the World Bank shows that Australia has recorded higher GDP per capita between 2011 and 2015 than Singapore. For instance, in 2011, the GDP per capita of Australia was 62216.547 U.S Dollars while that of Singapore was 53093.67 U.S Dollars (World bank, 2017). This scenario demonstrates that Australia has higher living standards and economic productivity than Singapore. From 2014, both Singapore and Australia have experienced a decline in the GDP per capita.
Unemployment refers to a scenario where able and willing to work persons fails to secure a job at the prevailing wage rate. The three types of unemployment that are likely to occur in any economy include structural, frictional and cyclical. When unemployment is rising, it is an indication of deteriorating economy while a drop in the level of unemployment depicts that the economy is doing well and thus generating jobs for the individuals (Frank & Bernanke, 2011, p.64). Between 2011 and 2016, Australia has registered higher levels of unemployment than Singapore. In fact, Singapore’s unemployment rate has been below 3% while that of Australia is fluctuating ranged between 5% and 6%. The highest level of unemployment recorded in Singapore in the past few years in 2.9% in 2011 while in Australia is 6.074% in 2014 (World Bank, 2017). This scenario shows that the economy of Singapore is doing well in job creation than Australia.
The current account is one of the important indicators of external balance of a country in comparison to other nations. This account records net exports of both goods and services, net primary and net secondary earnings (Goodwin et al., 2014, p.58). The excess in the current account balance is an indication that the country has higher cash inflows than cash outflows and hence likely to have greater economic expansion. On the other hand, a deficit in the current account balance shows that the cash outflows exceed the cash inflows. Unlike Australia which has recorded a current account deficit between 2011 and 2016, Singapore has registered current account balance surplus. For example, in 2015 Singapore had a current account surplus of 53.757 Billion U.S Dollars whereas as Australia had a current account balance deficit of 58.28 Billion U.S Dollars (World Bank, 2017). T
The exportation of goods and services contributes significantly to the economic progress of both Australia and Singapore. Some of the commodities exported by Australia include iron ore, gold, machinery, and transportation equipment while leading Singapore’s exports are machinery and equipment, pharmaceuticals, refined petroleum, beverages, and foodstuffs (Central Intelligence Agency (US), 2017). When these countries encounter ups and downs in the export of goods and services their economic growth is also affected. From 2011, both Australia and Singapore have had a moderate increase in export earnings a situation that has contributed to relatively small progress in their economy. For example, in 2011 Australia’s and Singapore’s export grew by 0.93% and 5.63% respectively. This growth in export earnings was lower than that of 2010 which was 5.14% and 17.40% respectively (World Bank, 2017).
The fluctuations in export earnings of these nations are mainly attributed to changes in prices in the international market. When the prices of leading commodities such as iron ore and machinery drops, then the contribution of exports to the Gross Domestic Product reduces due to lower earnings. For example, in 2015-2016 fiscal years, Australia experienced a decline in export earnings from iron ore, coal, and crude petroleum while there was an improvement in earnings from gold, personal travel services, and financial services (The Australian Trade Commission, 2017).
Household consumption expenditure entails the market value of all services and goods bought by families (Goodwin et al., 2014). Household spending is an essential element of Gross Domestic Product of both Australia and Singapore. Therefore, any variation in household expenditure impacts directly to economic growth. Usually, the economy grows at a higher pace when there is an increase in household spending and expands at a lower rate when this expenditure is on the decline. Between 2011 and 2016, both Singapore and Australia have encountered ups and downs in the household spending and hence variations in their economic growth. Although there have been deviations, both nations have maintained a positive growth in the household consumer spending and thus positive economic progress.
In the past five years, both Australia and Singapore have had favorable conditions in their housing market and thus economic progress. In fact, Australia is experiencing a boom in the housing market a situation that is often tied to high population influx in the main cities like Melbourne and Sydney. Moreover, growth in Australian housing industry is attributed to the low cost of borrowing, negative gearing and tax concessions provided by the government. As a result of for homes in Australia, the prices have increased significantly and hence economic growth.
Favorable conditions in the housing market have led to an increase in the residential construction activity in Australia. From the graph nine above it is clear that the building of homes in this country is on the increase. The construction activity avails employment to the residents and hence an increase in the economic growth.
Like Australia, Singapore is also experiencing growth in the prices of property. High prices are attributed to strong demand in the main cities a scenario that has attracted has led to an increase in the construction of houses. As a result, employment levels have increased hence economic development.
Economic growth witnessed in Australia and Singapore for the past five years has helped in accelerating the living conditions of people. In these countries, individuals have access have to a variety of goods and services that boost their wellbeing as well as their life expectancy. Based on Human Development Index provided by the United Nations, it is clear that economic growth is contributing to better standards of living in both Singapore and Australia. In 2015, the Human Development Index of Australia was 0.939 and was ranked second internationally after Norway. On the other hand, Human Development Index of Singapore in 2015 was 0.925 and is rated fifth globally (United Nations, 2017). The Human Development of these countries has been on the rise in the past five years.
As these economies continue to expand, the resources spent on the infrastructure like communication, electricity, gas, transportation networks, and water provision as well as a variety of technologies has also accelerated. Studies exhibits that as the Gross Domestic Product of country increases, its technological stock and infrastructure will also improve. In the past few years, both Australia and Singapore had encountered an improvement in the technology and infrastructure. For instance, strong conditions in the housing market of these countries have made the government develop infrastructure such as transport, electricity, water, and sewerage with the aim increasing the supply of well-situated land to facilitate the development of new dwelling units.
Higher incomes and output in Australia and Singapore have helped to increase the government tax revenue. Therefore, it is easier for these governments to support measures of reducing poverty levels, elevate educational standards as well as health care without necessarily increasing the tax rates. Additionally, Australia and Singapore provides benefits for the poor, enhance schools in deprived areas, and provide training to the unemployed as a way of eliminating poverty in the society.
As these economies experience economic progress from one year to another, the cost of living is also rising. Statistics from the World Bank demonstrates that the consumer price index of both Australia and Singapore has been growing in the past five years. Between 2011 and 2015, the consumer price index of Singapore has been higher than that of Australia. This scenario demonstrates that the cost of living in Singapore is high compared to Australia. The increase in the cost of living is also exhibited by the current housing affordability crisis in Australia.
The increase in environmental pollution is also another adverse impact resulting from economic growth. Like many other countries around the globe, the amount of pollution in Australia and Singapore is on the rise as the economy grows. There is depletion of non-renewable resources as well as damage to the natural surroundings due to economic activities such as construction and mining. Furthermore, the emergence of new factories and purchase of more personal vehicles are also contributing to environmental degradation in these economies. As a measure to mitigate against environmental pollution, the governments of these two countries are supporting the production and utilization of renewable energy such as the wind and solar power.
Conclusion
Australia and Singapore have recorded positive annual economic growth in the past five years. These nations have open economies with minimal restrictions on the importation of goods and services and are have significant economic freedom. These countries have also had higher GDP per capita signaling an increase in productivity and the living standards of individuals. Between 2011 and 2016, Australia registered higher levels of unemployment than Singapore. The highest level of unemployment recorded in Singapore was in 2011, 2.9%, while in Australia is 6.074% in 2014. Moreover, in the recent years, Singapore has maintained a current account surplus while Australia has recorded current account balance deficit. Notable causes of variations in the economic growth of Australia and Singapore include changes in export earnings, fluctuations in household consumptions, and varying conditions in the housing industry. Export earnings are affected by shifts in the prices in the international market. When the prices drop, the export earnings decline thus slowing down the economic progress. The increase in export prices constitutes positively to the Gross Domestic Product. These nations have had relatively stable household consumption expenditure and healthy conditions in the housing industry and thus economic progress. Furthermore, economic growth has resulted in both positive and adverse effects in these economies. Some of the positive outcomes include improvement in living standards, advances in infrastructure and technology and reduction in poverty levels. On the other hand, the depressing consequences include an increase in the cost of living and environmental pollution.
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