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Economics and Australian Budget Deficit Essay

Introduction After 2008 financial crisis, the current economic is slowdown and governments have to come up “with rescue packages to bail out their financial systems” ( ,ћ). Last year, Julia Gaillardia speech to the Australia-Israel Chamber of Commerce said builds a new economy. She indicated that “the problems of Europe” and “position of strength in the world economy’.

Although, Australia has a stronger economy in the developed countries (Wright, 2012), economic situation of Australia is close to Rupee’s in 2012 and there are several fiscal challenge in domestic. This essay will state the international economic environment and fiscal challenge in Australia. Then it will analyze Budget contains in the 2013 Federal budget with economic theories. Finally, it will illustrate some effective strategies that several effective strategies that face these fiscal challenges.

International economic situation and Australian economic challenge The world economy remains frail and lingers about another major downturn (… ). Especially in developed countries, continually high unemployment rate and unexpectedly declining of economic growth are addressed the most pressing halogens. Even though, the global economic growth is stagnancy, Australian economy is envied by developed countries, based on However, there is no doubt that three critical fiscal challenges of Australia are faced

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by governments.

The first one is that structural budget deficit that means expenditure of government exceed the revenue from tax at the current level If the budget deficit is moderate, it could not hurt the economy and it may promote economic growth, because higher expenditure of government increases the GAP growth. Yet, if the deficit goes too high level, the higher debt can make it more difficult for the government to raise funds. This is because, government has to repay high interest for their creditors who demand a great return, and this increases the deficit each year (Madame, 2013).

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