business planning

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Economy Watch reports that there has been an improvement in the global growth in the third quarter of 2005 . The current trend suggests that global economic growth may reach a greater level than the average for the 1990-2004 period . IMF projected world growth at about 4 .1 with developed countries growing by around 2 .6 and developing ones by about 6 ( Reserve Bank of India , 2007 . Economies in Southeast Asia are developing impressively with China leading the pack at around 9 , Hong Kong

about 8 and India 7 . Most advanced economies have been experiencing a drop in inflation accompanied by falling consumer prices in the US , Japan and the Euro countries (Reserve Bank of India , 2007

The Reserve Bank of Fiji reiterates that the global economy is continuing to show positive growth , with the Australian economy exhibiting a similar trend . The growth in Australian economy is expected to get even better in 2007 (Reserve Bank of Fiji , 2007 . In 177 countries of the world , Australia 's economy is ranked 3rd in terms of human development (Economy Watch , 2007 . Australia 's competitive edge is maintained by the labor force growth rate of about 1 .1 ( 1997-2004 that is way ahead of other advanced economies within the same period Decreased rates of unemployment rates also contributed greatly to Australia 's economic success

An economic outlook from the 2006-2007 budget expect inflation to be moderate at about 2 in the years 2006 and 2007 . The higher oil prices are likely to have a direct effect on prices of goods and services contributing to inflation . Factors that could lower inflation are the increase in productivity and slow growth in prices of imports (Budget 2007-07 , 2007

Reuters reports that Australia 's central bank , raised interest to an all time high of about 6 , the highest ever this decade . The increasing interest rate has been the observed trend since the middle of 2002 (Reuters , 2007 . Labor markets that are tight , high demand for credit and increasing inflation are the reasons for the rise in interest rates To keep inflation checked , a more restrictive monetary policy has been adopted which translates to an increase in interest rates (RBA , 2007

The implication of exchange rates on a country 's economy cannot be ignored . In this case of Australia , the demand for the Australian dollar is a reflection of how International trade is faring (McGregor , 2007 Floating the Australian dollar allows for a flexible exchange rate that serves as a cushion for shocks . It provides insulation against overseas disturbances and diminishes transfer of domestic instability to the international market

The current increase in interest rates is likely to induce appreciation of the Australian dollar which in turn discourages exports while encouraging imports subsequently decreasing the net capital flow . From this it can be deduced the increased rates are more hurtful to the agricultural sector than beneficial to it and also explains why presently Australian exports are at their least competitive

A decrease in exchange...