The export and import price index measures the rate of change a country experiences in the perspective imported and exported goods and services. These indices describe the change in economic welfare of the country depending on the changes experiences in the imported and exported goods and services (Pigou 2013). However, changes in the key prices have an impact on the dynamic consequences of the key macro variables such as investments, consumption and savings. However, any changes in terms of trade over the years will also result in the distributional implications within the country (Gillitzer and Kearns 2010).
In this report, the export and import indices will be studied in the perspective of Australia and various trends over the years will be analyzed. Moreover, the terms of trade data will analyze the volatility in the export as well as import commodities over the past decade.
Over the past decade, Australia has experienced the fluctuating trend in the export commodities and import manufacturers. As a result, the expectation lies in the fluctuating trend that may experience an ongoing fall in future. The most common theory that could be evaluated is the declining demand of raw materials with the ongoing economic development. The other reason that enlightens is the market power by the manufactured goods is leading to increase in production with relatively price fall for the manufacturers than the commodities.
As far as the trend in export price is concerned, the Australian economy has grown from 54.7 in 2000 to 80.7 in 2015. Although, the economy has experienced many fluctuations in the interval, but faced a decline during the global recession periods by dipping to 73.8 in 2007 but a rise in export indices to 92.3 in 2008. However, the export rise has been more in value terms when after the 2009 till 2012 and hence a declining price index since 2012. The graph depicting the fluctuating trend in export indices is given below.
The import price indices has also been like export indices showing a fluctuating trend but has been more than the export indices in any way. The changes in exports indices show a fluctuating trend with a rise in early 2000 but a decline experienced till 2007. Moreover, in 2008-2009, the import price indices rise to an overshoot due to the global recession period when the goods were imported from foreign countries. Later in 2010-11, the import indices remain consistent as the global economy was reviving from the shock. However, since 2012, of the export indices have decreased, import indices have increased showing an upward trend in the prices of goods. The graph below explains the trends in the import price indices from 2006 – 2015.
The terms of trade of the country has been showing a declining trend since 2012 but had shown an increasing trend from 2000 to 2011. This may be primarily due to the direction f trade that is shifted from UK to China as the ties between Australia and China has grown in the past couple of years (Tan, Sun and Lau 2013). The underling graph depicts those changes in the terms of trade data.
The Global recession period had a short term impact on the Australia’s trade such that the major influence has been experienced in the resources with a strong fall in the commodity prices in 2008 such that change had seen strongly in the export price indices (Thompson, Murray and Jomini, 2012). However, in volume terms, though the exports of resources show an increasing trend but taken the opportunity to build stock commodity prices were low. However, all the major sectors of the economy has recovered from the global financial crisis, but the only sectors that still experience the slow recovery are the service sector of the world economy in traditional American and European service markets in conjunction with decline in the education services in the Asian markets (Andrew 2012). On the seasonally adjusted basis, the global financial crisis has impacted the Dollar sharply against the US Dollar that had shown to be depreciating with the increased price of imports. As a result, this has resulted in the reduction in the demand for the imported goods and services (Australian Government 2016).
The composition of imports has been accounted of 50% to capital and intermediate goods (Bishop, Kent, Plumb and Rayner 2013). However in 2013-14, because of low tariffs with the world economy, the consumption goods have also increased accounting for 25% of imports on the whole. On the other hand, sourcing of consumption goods with various countries, the import prices have decreased according to June 2014 result (Anderson 2016). The top 5 imported goods that are divided according to their shares such as personal travel that is education has 7.5% shares of the imported goods, followed by crude petroleum being 6.4%, passenger motor vehicles accounting for 5.3%, freight services for 2.9% and refined petroleum for 5.7% in the years 2013-2014 (Australian Government 2016).
The past decades export success till 2011 has been due to the minerals as well as fuels that increased with an average rate of of 16.3 per cent per annum over the past ten years, more than double the rate of exports overall (Andrew 2012). The change in exports have been seen from 90’s to 200’s such that in 2013- 2014 the exports have been driven by the iron ore as well as coal. The coal and iron ore share of goods have increased from 11.1 % to a total of 34.7% over the last decade and toady, Australia is the largest exporter of iron ore as well as metallurgical coal. However, the third, fourth and fifth goods are natural gas, education related travel services and personal travel that accounts for 4.9%, 4.8% and 4.2% of shares in exports. Though, there is a shift to the Australian economy is becoming education related hub that has increased the intake of students to 410,000 students and 6.4 million foreigners (Anderson 2016).
The Australian exports by sector accounts for maximum share in minerals that is 50.1% followed by service sector that is 17.4% and 12% in rural whereas 12.7% in manufacturers whereas the service sector share has increased by 5.8% through the year September 2015 (Australian Government 2016).
The resulting price decreases have so far had little effect on export volumes on the grounds that most Australian creation has stayed gainful. There have been some reports of less and smaller productive mines shutting down over the previous year, especially referring to the coal sector (Morantz 2013). However, disclosures are conceivable if costs stay at current levels for a longer period of time or may decline in future. While exports of commodities in bulk are required to keep on growing throughout the years as supplementary capacity is ahead of the line such that the moderate pace of development is expected (Gorajek and Rees 2015).
On the other hand, volumes of the imports rose as the commodity prices have increased overtime in accordance with the mining capital goods because of the appreciation in exchange rates in Australia. However, commodity prices in 2014-2015 have unwound leading to decline in imports of capital goods and services (Gorajek and Rees 2015).
Conclusion:
To conclude, it can be said that the import and export indices have experienced vast fluctuation over the past decade. However, the resulting decrease in export indices is due to the decline in the demand of the iron ore and metallurgical coal. On the other hand, the import indices have been high due to the expanding nature of the service sector that had been expanding but at the declining rate due to the declining nature of dollar that has been impacted by the global financial crisis and still is recovering from the impact
2 a) Mean, Median, Mode of the following distribution
0, 1, 1, 3, 0, 0, 2, 5, 0, 1, 1, 2, 0, 1, 1
In ascending order – 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 2, 2, 3, 5
èMean = 18/ 15 = 1.2
èMedian = 1 (middle vale of the series)
èMode = 1 (the maximum number of observation repeated in the sample) (Lomax and Hahs-Vaughn 2013).
2b) i) The time taken for the exam on the sample of 9 students.
33, 29, 45, 60, 42, 19, 52, 38, 36
In ascending order – 19, 29, 33, 36, 38, 42, 45, 52, 60
èMean = 354/9 = 39.33
è Median = 38 (the middle most part)
è Mode = N.A.
References:
Anderson, D. 2016. Fifty years of Australia’s trade. dfat.gov.au. Available at: https://dfat.gov.au/about-us/publications/Documents/fifty-years-of-Australias-trade.pdf [Accessed 13 May 2016].
Andrew, J. 2012. Australia’s trade performance 1990-91 to 2010-11. dfat.gov.au. Available at: https://dfat.gov.au/about-us/publications/Documents/australias-trade-performance-1990-91-2010-11.pdf [Accessed 13 May 2016].
Australian Government. 2016. Australian Industry Report 2015. Available at: https://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/AIR2015.pdf [Accessed 13 May 2016].
Bishop, J., Kent, C., Plumb, M. and Rayner, V., 2013. The Resources Boom and the Australian Economy: A Sectoral Analysis’. RBA Bulletin, pp.39-50.
Cressie, N., 2015. Statistics for spatial data. John Wiley & Sons.
Gillitzer, C. and Kearns, J. 2010. Long-Term Patterns in Australia’s Terms of Trade. rba.gov.au. Available at: https://www.rba.gov.au/publications/rdp/2005/pdf/rdp2005-01.pdf [Accessed 13 May 2016].
Gorajek, A. and Rees, D. 2015. Lower Bulk Commodity Prices and Their Effect on Economic Activity. rba.gov.au. Available at: https://www.rba.gov.au/publications/bulletin/2015/sep/pdf/bu-0915-4.pdf [Accessed 13 May 2016].
Lomax, R.G. and Hahs-Vaughn, D.L., 2013. An introduction to statistical concepts. Routledge.
Morantz, A.D., 2013. Coal Mine Safety: Do Unions Make a Difference?.Industrial & Labor Relations Review, 66(1), pp.88-116.
Pigou, A.C., 2013. The economics of welfare. Palgrave Macmillan.
Tan, H., Sun, A. and Lau, H., 2013. CO 2 embodiment in China–Australia trade: The drivers and implications. Energy Policy, 61, pp.1212-1220.
Thompson, G., Murray, T. and Jomini, P., 2012. Trade, Employment and Structural Change: The Australian Experience (No. 137). OECD Publishing.
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