Reflection

a.) Learning about currency exchange, transportation, markets, and culture shock ("expect the unexpected") in this class throughout the quarter will be most directly applicable to understanding how the world works. All of these topics were discussed in detail about countries all over the world and I was able to specifically research my study abroad country, which enabled me to think about the world in a more economic way than I previously had.

b.) I will most likely keep up with global news in order to continue learning economically, and I will definitely keep up with current Australian news before I leave and throughout my stay there. I was absent on the day we went over urban planning, so I think I'd also like to learn more about that topic since I was unable to attend class.

c.) My advice to future students taking this class is that if you are planning on studying abroad the following year, this class is extremely valuable to your preparation. Even if you're not planning on studying abroad through Kalamazoo College, this class may encourage you to travel or study abroad in the future. I would suggest this class to students outside of business or economics majors, mainly because I'm a biology/pre-med/environmental science major and science majors rarely get the chance to take a class outside their major. This class was very friendly towards non-economics/business students and was really a entertaining and valuable class. I enjoyed learning and discussing topics that I rarely get to learn about as a biology major. I think that this is a very beneficial sophomore seminar, especially since many sophomores are getting ready for study abroad. (And if you aren't studying abroad...maybe this class will change your mind!!)

News Summary: Australian Economy Hit by Slowing Growth

Australian Economy Hit by Slowing Growth

1.) Recently released data is showing a slower growth over the year to March than economists expected. Economists had predicted a GDP growth of 0.8% for the March quarter and a 'year-on-year' growth of 2.7%. However, the Australian Bureau of Statistics reported that for the first quarter of 2013 the GDP grew 0.6% and the growth for the year was 2.5%. UBS chief economist Scott Haslem said, "The overall tone of the release is pretty soft. We saw some improvement in consumer consumption and trend improvement in housing, but at this stage it's not sufficient to offset the pull-back we've seen in capital expenditure in this quarter. When we take away the net export contribution of about 1% in the quarter, the domestic economy was clearly negative." Haslem noted that the latest figures, released by the Australian Bureau of Statistics, showed an increase in consumption due to lower interest rates, but also that business investment and activity was not improving. The March quarter growth was largely due to the finance, mining, transport, and retail industries. However, this growth was counteracted by a 0.9% fall in public investment and a 0.4% drop in inventory changes. Following this release of data, the Australian dollar fell to 96.11 U.S. cents. This causes investors to believe that the data could prompt further rate cuts. Due to slow retail sales, falling job ads, and weakness in the manufacturing sector, some economists have also altered their GDP forecasts to be lower than before. The Reserve Bank held the cash rate a 2.75%, but also said it retained the "scope for further easing, should that be required".

 
2.) This issue directly relates to the calculation for GDP that we have discussed multiple times throughout the quarter. We established in class that GDP = Consumption + Investment + Government + Net Exports (Exports - Imports). The Australian Bureau of Statistics reported a small growth in consumption, but there was also a decrease in business investment and activity, which would cause the GDP to either decrease or more generally just slow in growth. The release of this data also affected the inflation of the Australian dollar as it fell from 96.35 to 96.11 U.S. cents.

3.) This situation could have been caused by the inflation of the Australian dollar and the increasingly high cost of living, which could have caused businesses to be less interested in investing in Australia and the fall in public investment. The slowing growth of the Australian economy might also be due to slowing investment in machinery and equipment. The only resolution I could propose to solve this issue would be to somehow encourage more public and foreign investment in the Australian economy, however I realize that the solution to this problem is much more complicated than briefly described in this article.