Australia Economy Scenario Essay


1.Explain why Australia is efficient in exporting iron ore, natural gas and coal, while the UAR exports oil?
2.How would the fact that the US can produce fracking Oil and Gas at lower prices than in 2016 affect Australia and the UAR?


1.Australia is one of the few countries which have been blessed by all the natural resources. The government also keeps the public debt at very low point and maintains stable but strong financial system in their economy. The government has made an entrance in globalization with a strong economy. The demand for those resources has been very sharp in the Asian countries[1]. They also maintain a stable business relationship with the Egypt, Sudan, Syria, Turkey and many other countries in that regiony providing them commodities at a lower price than the market. The country`s service sector is the largest part of the jobs. It is around 72.5% of the total GDP. In the financial crisis of the year 2008, the country was unaffected and stable due to the interior government decision and central bank policies[2].

The country is also having a high level of resources such as coal, gold, uranium and renewable energy resources. This level of natural resources has been attracting the investors all over the world. The country is invested recently which is about US$40 billion Gorgon Liquid Natural Gas Project, which has produced a major effect in the resource sector[3]. Australia has made the Free trade Agreement with every major country in Asian and United States continents. The country participate in WTO, G20 and many more trade agreements worldwide.In case of United Arab Emirates (UAE) the country`s financial system is fully dependent upon the oil producing and exporting system. The oil has discovered around 60 years ago. The service sector is also depending upon the oil service industry. Due to the huge resource of the oil, the country`s real estate has been increasing in leaps and bounds. The country was affected by the financial crises of year 2008- 09. The price of the real estate went down in the recession. The government has announced to reform the direct and indirect tax structure 1st April 2018. The country`s economy mainly hanging on the natural resources. Therefore the country`s wealth is in still not in its full swing, therefore we can state that Australia`s government policies and the natural resources has made the country more efficient and effective from the point of exporting the natural resources than UAE.

2.The method of producing the crude oil in the US is full depend upon the machinery where the investment has been huge and the production level is also high. The American is skimming the price of the oil for creating their market. The price in the oil and gas has dropped and the main benefited is the oil exporting countries. The method has been affecting the economy of US too. In the case of the OPEC countries they are selling the barrel at even lower prices and facing losses. But due to huge reserves and the producing capabilities, they could be sustaining for the upcoming 20 years in this process. They are also maintaining the price at even lower than the Americans. Australia has just entered in the market therefore it has become hard for them to sell the oil at even lower prices than its cost[4]. The effect is also in the demand of Asian countries which are now shifting towards to the American Oil or the OPEC country oils[5]. Australia is also affected in the price war of the crude oil market. Australia entered at later stage in the market of crude oil of the globalization and it is in still growing stage. Therefore the process of losing the price of the oil is being highly affected by the economy of the country to larger dimensions.

The United Arab Republic (UAR) is the part of the Egypt and Syria[6]. The Egypt is going through a political turbulence and Syria is also having interior wars within the country. The wealth of the UAR is determined by the crude oil. Therefore the wealth of UAR is having a majorly disorder. The World Bank, IMF or OPEC country should be coming into the picture and resolve the matter as soon as possible. They should come into the discussion and set a price for the entire price exporting oil countries for the benefit of the overall.


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