Australia Economic Progress Report Current Events My current event will be discussing ALDI, and it’s impacts on the Australian Economy.
ALDI is a large German supermarket chain which was been in Australia for around 17 years. However, it has only been within the last four years that ALDI has increased their market share substantially in the market for groceries in Australia. For many years in Australia we have grown up around Coles and Woolworths group, who by market share are the most prominent supermarkets, with both making up around 70% of the market. In recent years however, Woolworths and Coles have felt the impacts of ALDI’s foothold in the Australian market, with their market share falling from 77.3% in 2006 to 68% in 2017, according to Roy Morgan. So, what does this mean for the Australian economy? Well, first there is now more Australian dollars being sold to go overseas than before. This can help to devalue the Australian dollar as the supply of Australian dollars is increasing, incr easing, combined with the low interest rates we are currently experiencing. One of the larger elements is the depreciation of the CPI. Grocery’s being a regular and necessary
purchase for Australian households, a new supermarket player like ALDI who has increased their market share to 13.2% can have drastic effects on the CPI. As competition increases Coles and Woolworths may become involved in a price war. In 201 6 the RBA said they have had a “downward shift in the average rate of retail inflation”. ALDI’s ability to appeal to discounts is now forcing other
supermarkets to follow the trend. The ABS in 2016 showed a deflation in the food and beverage sector by -0.2 in March 2016. As larger forgiven companies like Amazon expand into areas that are heavily weighted in the CPI like groceries, this can cause deflation in the Australian Economy which may have severe impacts in the spending/ saving ratio (forcing more people to spend) and have serious impacts on the NX part of the GDP equation.
GDP Highlights
% Change GDP by Quarter 0.06 0.05 0.04 0.03 0.02 0.01 0
5 6 7 5 3
8 0 0 6 3
1 5 2 6 3
5 9 4 6 3
9 3 7 6 3
2 8 9 6 3
6 2 2 7 3
9 6 4 7 3
2 1 7 7 3
6 5 9 7 3
0 0 2 8 3
3 4 4 8 3
7 8 6 8 3
0 3 9 8 3
3 7 1 9 3
7 1 4 9 3
1 6 6 9 3
4 0 9 9 3
8 4 1 0 4
1 9 3 0 4
4 3 6 0 4
8 7 8 0 4
2 2 1 1 4
5 6 3 1 4
9 0 6 1 4
2 5 8 1 4
5 9 0 2 4
9 3 3 2 4
3 8 5 2 4
6 2 8 2 4
Bullet Points: -
In 2008 when the GFC took place the GDP in Australia took a sharp decline, this was due to the declined outlook on economic decisions which caused many consumers to defer spending due to increased economic instability.
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When Coal and Iron ore prices (Australia’s biggest exports) increased in 2009 – 2017 the GDP
of Australia began to increase. However, when the prices began to decline again in 2013 GDP began to fall again. When Iron ore was at it’s lowest of in Dec 2015 t he graph shows a
decline in GDP growth as well. -
The Australian Government recently has been achieving their go al of 3% inflation as seen by the steady rate of inflation since Dec 2015.
Sector that most impacted-on GDP Growth: Mining, Australia’s biggest exports are coal and iron ore. The prices of these commodities have a
heavy influence on the Australian GDP . As the price increases the mining companies have more profit and more money flows into Australia, helping the value of NX increase as well as providing a boost to consumer and business outlook. The price of iron ore climbed to a high of 96 Dollars in 2017 boosting the profits of Australia’s mining companies. The mining sector is one of the main
influences on the GDP in Australia.
Labour Market Highlights
Unemployment Rate 1997-2017 10% 9% e t a R t n e m y o l p m e n U
8% 7% 6% 5% 4% 3% 2% 1% 0%
7 7 9 9 9 9 1 - 1 r c a e M D
8 9 9 1 p e S
9 9 9 1 n u J
0 0 0 0 0 0 2 - 2 r c a e M D
1 0 0 2 p e S
2 0 0 2 n u J
3 3 0 0 0 0 2 - 2 r c a e M D
4 0 0 2 p e S
5 0 0 2 n u J
6 6 0 0 0 0 2 - 2 r c a e M D
7 0 0 2 p e S
8 0 0 2 n u J
9 9 0 0 0 0 2 - 2 r c a e M D
0 1 0 2 p e S
1 1 0 2 n u J
2 2 1 1 0 0 2 - 2 r c a e M D
3 1 0 2 p e S
4 1 0 2 n u J
5 5 1 1 0 0 2 - 2 r c a e M D
6 1 0 2 p e S
7 1 0 2 n u J
Time by Quarter
1. In Australia, the natural rate of unemployment (The level of employment that causes no pressure on inflation) is around 5%. Since the GFC the Australian government has done well to keep the unemployment rate around 5% with the rate moving between the 5 -6.5% range over the last 10 years which is an indication of a stable economy. 2. The figures may show a smooth unemployment rate which is close to the natural, which is true however, unemployment skips over some important details. For example, to be ‘employed’ in the eyes of the ABS you must be paid for 1 hours of work per week. This
means people with part time work who are wanting more work are not included, ‘underemployment’ is excluded from the unemployment rate.
3. Since 1997 after the Asian crisis, Australia worked toward decreasing the unemployment rate, they got it down from 9% in 1997 to 4% in 2007. However, the GFC caused many companies to lose revenue and forced many people to be made redundant. This explains the sharp increase to 6% from 4% in 2008.
Price Movements
CPI Australia 1997-2017 120 100 80 I P 60 C
40 20 0
7 7 9 9 9 9 1 - 1 r c a e M D
8 9 9 1 p e S
9 9 9 1 n u J
0 0 0 0 0 0 2 - 2 r c a e M D
1 0 0 2 p e S
2 0 0 2 n u J
3 3 0 0 0 0 2 - 2 r c a e M D
4 0 0 2 p e S
5 0 0 2 n u J
6 6 0 0 0 0 2 - 2 r c a e M D
7 0 0 2 p e S
8 0 0 2 n u J
9 9 0 0 0 0 2 - 2 r c a e M D
0 1 0 2 p e S
1 1 0 2 n u J
2 2 1 1 0 0 2 - 2 r c a e M D
3 1 0 2 p e S
4 1 0 2 n u J
5 5 1 1 0 0 2 - 2 r c a e M D
6 1 0 2 p e S
7 1 0 2 n u J
Time
1. Out of all the distinct categories Tobacco has increased the most over the years. As Tobacco is a demerit good (causes harm to society) through lung cancer and other social issues, over the last 40 years the government has increased the taxation on Cigarettes to decrease consumption. At the start of the data we have in March 1978 Tobacco and Alcohol products were valued as very cheap within their basket however in 2017 they are the most valuable out of all the baskets, which demonstrates the governments efforts to reduce consumption through taxes.
