Microeconomic Issues and Their Impacts and Responses
Summary
The retail sector has a major role in the growth of the Australian economy and is the barometer of the economic health of Australia 's future growth prospects. When the economy is thriving so does the retail industry within an economy – thus, the level of demand within the retail industry has a significant impact on other industries as the money within the retail industry goes in a circle complementing the growth of the other industries. The performance of the retail industry is a strong indication for the government as to what monetary policies to implement in order to determine the amount of money floating around within the economy. It has been observed before that strong performance from the retail industry is translated into more jobs being created which in turn indicates a sustainable economic growth.
The Retail Sector
The Declining profitability in the retailing sector is a major concern for the Australian economy. This sector is the largest source of employment and is the largest contributor to the GDP of Australia. The reasons for this drop in profitability is attributed mainly due to the major factors like weak consumer demand, rising interest rates, strong Australian dollar and the growth of online shopping. The retail industry is a significant contributor to the Australian economy, representing 4.1 per cent of GDP and 10.7 per cent of employment. According to chart 1 from the appendix, the growth rate of the retail industry in recent years has considerably slowed down and has contributed less to the GDP of the Australian economy whilst comparing it with other sectors. While short-term or cyclical factors have contributed to this slowdown, the growth of retail sales has experienced a long-term slowdown due to changes in consumer buying habits. Further, while there has been price deflation in some sub-categories of retail, overall, sales volumes have continued to diminish. There has been a growing trend of online shopping from other
The retail sector has a major role in the growth of the Australian economy and is the barometer of the economic health of Australia 's future growth prospects. When the economy is thriving so does the retail industry within an economy – thus, the level of demand within the retail industry has a significant impact on other industries as the money within the retail industry goes in a circle complementing the growth of the other industries. The performance of the retail industry is a strong indication for the government as to what monetary policies to implement in order to determine the amount of money floating around within the economy. It has been observed before that strong performance from the retail industry is translated into more jobs being created which in turn indicates a sustainable economic growth.
The Retail Sector
The Declining profitability in the retailing sector is a major concern for the Australian economy. This sector is the largest source of employment and is the largest contributor to the GDP of Australia. The reasons for this drop in profitability is attributed mainly due to the major factors like weak consumer demand, rising interest rates, strong Australian dollar and the growth of online shopping. The retail industry is a significant contributor to the Australian economy, representing 4.1 per cent of GDP and 10.7 per cent of employment. According to chart 1 from the appendix, the growth rate of the retail industry in recent years has considerably slowed down and has contributed less to the GDP of the Australian economy whilst comparing it with other sectors. While short-term or cyclical factors have contributed to this slowdown, the growth of retail sales has experienced a long-term slowdown due to changes in consumer buying habits. Further, while there has been price deflation in some sub-categories of retail, overall, sales volumes have continued to diminish. There has been a growing trend of online shopping from other
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