Assigment 2 - GROUP ASSIGNMENT - MACROECONOMIC DATA ANALYSIS PDF

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Assignment 2- Group AssigmentCourse code and name ECON1192-Macroeconomic 1Member Name Group 5Phan Thang Long (s3818013) Ogedengbe Victor (s3619017) Ton That Ngo Thinh (s3836623) Nguyen La Thai An (s3836209) Vo Huy Long (s3804614) Nguyen Ba Hien (s3738243) Submit Date 18 th December, 2020Lecture Loc ...

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Assignment 2- Group Assigment Course code and name Member Name Group 5

Submit Date

ECON1192-Macroeconomic 1 Phan Thang Long (s3818013) Ogedengbe Victor (s3619017) Ton That Ngo Thinh (s3836623) Nguyen La Thai An (s3836209) Vo Huy Long (s3804614) Nguyen Ba Hien (s3738243) th 18 December, 2020

Lecture

Loc Truong Minh

Word count

3743 (Main Content, without reference and table)

QUESTION 1 Part A – Collecting data In this section, China, the United Kingdom, Indonesia and Vietnam have been introduced in the combination of countries in order to studying the tendency of several main macroeconomic

indicators between developed (including China and the United Kingdom) and developing countries (including Indonesia and Vietnam GDP per capita lower than $12,000). The data used in this study comes from the open source provided by World Bank statistics, including all macroeconomics indicators in unit of USD, ranging from 2009 to 2019. These indicators include nominal GDP (Current US$), real GDP (Constant 2010 US$), GDP per capita (in USD), GDP growth (%) and Unemployment rate (% by statistics of ILO). The following tables represents all macroeconomic indicators in all countries in the combination set, including Australia, the United Kingdom, Vietnam, China, Indonesia, and Malaysia in the period from 2009 to 2019. Year

AUSTRALIA Nominal GDP ($)

Real GDP ($)

GDP GDP growth Unemployment per capita ($) (%) (%)

2009

927,805,183,331

1,122,922,429,785

42,772.36

1.94

5.56

2010

1,146,138,465,604

1,146,138,465,604

52,022.13

2.07

5.21

2011

1,396,649,906,339

1,174,365,405,253

62,517.83

2.46

5.08

2012

1,546,151,783,873

1,220,378,941,628

68,012.15

3.92

5.22

2013

1,576,184,467,015

1,251,924,213,148

68,150.11

2.58

5.66

2014

1,467,483,705,132

1,283,636,898,773

62,510.79

2.53

6.08

2015

1,351,693,984,525

1,311,782,435,234

56,755.72

2.19

6.05

2016

1,208,846,993,740

1,348,127,423,067

49,971.13

2.77

5.71

2017

1,330,135,756,844

1,380,045,920,528

54,066.47

2.37

5.59

2018

1,433,904,348,500

1,420,623,874,172

57,395.92

2.94

5.3

2019

1,392,680,589,329

1,447,570,633,487

54,907.10

1.9

5.27

Year

UNITED KINGDOM Nominal GDP ($)

2009

Real GDP ($)

GDP per capita ($)

2,410,909,799,034.12 2,427,911,661,952.04 38,713.14

GDP growth (%)

Unemployment (%)

-4.25

7.54

2010

2,475,244,321,361.11 2,475,244,321,361.11 39,435.84

1.95

7.79

2011

2,659,310,054,646.23 2,513,366,731,633.23 42,038.57

1.54

8.04

2012

2,704,887,678,386.72 2,550,537,514,107.23 42,462.77

1.48

7.89

2013

2,786,022,872,706.81 2,605,105,899,522.32 43,444.53

2.14

7.53

2014

3,063,803,240,208.01 2,673,033,408,186.23 47,425.61

2.61

6.11

2015

2,928,591,002,002.51 2,735,997,359,822.44 44,974.83

2.36

5.3

2016

2,694,283,209,613.29 2,788,478,032,878.88 41,064.13

1.92

4.81

2017

2,666,229,179,958.01 2,841,238,185,458.80 40,361.42

1.89

4.34

2018

2,860,667,727,551.97 2,879,331,250,460.18 43,043.23

1.34

4

2019

2,827,113,184,695.58 2,919,890,722,673.69 42,300.27

1.41

3.85

Year

VIETNAM Nominal GDP ($)

Real GDP ($)

GDP per capitaGDP growth ($) (%)

Unemployment (%)

2009

106,014,659,770.22 108,934,619,580.61 1,217.27

5.4

1.74

2010

115,931,749,697.24 115,931,749,697.24 1,317.89

6.42

1.11

2011

135,539,438,559.71 123,166,241,860.42 1,525.12

6.24

1.88

2012

155,820,001,920.49 129,629,226,783.14 1,735.14

5.25

1.68

2013

171,222,025,117.38 136,657,571,781.86 1,886.67

5.42

1.98

2014

186,204,652,922.26 144,834,688,912.57 2,030.26

5.98

1.87

2015

193,241,108,709.54 154,508,616,051.56 2,085.10

6.68

2.13

2016

205,276,172,134.90 164,104,855,205.20 2,192.21

6.21

2.08

2017

223,779,865,815.18 175,284,081,081.18 2,365.62

6.81

2.05

2018

245,213,686,369.16 187,686,812,137.29 2,566.60

7.08

1.99

2019

261,921,244,843.17 200,857,611,961.48 2,715.28

7.02

2.01

Year

China Nominal GDP ($)

Real GDP ($)

GDP per capita GDP growth ($) (%)

Unemployment rate (%)

2009

5,101,703,073,086 5,501,980,339,596 3,832.24

9.40

4.72

2010

6,087,163,874,512 6,087,163,874,512 4,550.45

10.64

4.53

2011

7,551,500,124,203 6,668,538,680,619 5,618.13

9.55

4.55

2012

8,532,229,986,994 7,192,934,987,439 6,316.92

7.86

4.57

2013

9,570,406,235,660 7,751,549,114,989 7,050.65

7.77

4.59

2014

10,475,682,920,595 8,327,160,831,972 7,678.60

7.42

4.61

2015

11,061,553,079,876 8,913,503,612,416 8,066.94

7.04

4.63

2016

11,233,276,536,737 9,523,968,278,958 8,147.94

6.85

4.53

2017

12,310,409,370,893 10,185,617,478,789 8,879.44

6.95

4.44

2018

13,894,817,549,374 10,873,123,622,055 9,976.68

6.75

4.28

2019

14,342,903,006,431 11,537,484,336,928 10,261.68

6,11

4.32

GDP growth (annual %)

Unemployment rate (% of total labor force)

4.629 6.224 6.17 6.03 5.557 5.007 4.876 5.033 5.07 5.17 5.025

6.106 5.614 5.153 4.468 4.336 4.409 4.514 4.301 4.185 4.511 4.687

GDP growth (%) -1.51 7.42

Unemployment (%) 3.69 3.25

Year

Indonesia GDP per capita (current US$) 22,612.47 3,122.36 3,643.04 3,694.35 3,623.91 3,491.63 3,331.70 3,562.85 3,837.65 3,893.85 4,135.57

Nominal GDP ($)

Real GDP ($)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

539,580,000,000 755,094,000,000 892,969,000,000 917,870,000,000 912,525,000,000 890,815,000,000 860,854,000,000 931,877,000,000 1,016,000,000,000 1,042,000,000,000 1,119,000,000,000

710,582,000,000 755,094,000,000 801,682,000,000 850,024,000,000 897,262,000,000 942,185,000,000 988,129,000,000 1,038,000,000,000 1,090,000,000,000 1,147,000,000,000 1,204,000,000,000

Year

MALAYSIA

2009 2010

GDP per capita ($) 202,257,625,195.06 237,390,711,222.56 7,292.49 255,016,609,232.87 255,016,609,232.87 9,040.57 Nominal GDP ($)

Real GDP ($)

2011 2012 2013 2014 2015 2016 2017 2018 2019

297,951,960,784.31 314,443,149,443.15 323,277,158,906.98 338,061,963,396.38 301,354,756,113.17 301,255,454,041.42 318,958,236,443.12 358,581,943,446.26 364,701,517,787.84

268,516,966,238.24 283,214,119,384.48 296,507,404,301.65 314,317,779,626.12 330,321,318,798.89 345,019,810,725.68 364,830,260,261.74 382,129,075,415.17 398,676,099,010.03

10,399.37 10,817.44 10,970.12 11,319.08 9,955.24 9,817.74 10,254.23 11,373.23 11,414.84

5.29 5.47 4.69 6.01 5.09 4.45 5.74 4.74 4.33

3.05 3.04 3.11 2.88 3.10 3.44 3.41 3.35 3.32

The following graphs show the level of both GDP, GDP per capita and economic growth in the four selected countries.

PART B: Based on the data

(%)

Unemployment rate of 6 countries 9 8 7 6 5 4 3 2 1 0 2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Year Australia Vietnam

United Kingdom Indonesia

China Malaysia

A. The key reason behind the unemployment The following line graph illustrates the evolution of unemployment rate in all four selected countries including China, the United Kingdom, Indonesia and Vietnam. Obviously, the joblessness level in group of developed countries including China and the United Kingdom is much higher than the group of developing countries of Indonesia and Vietnam. United Kingdom is the developed country with the highest rate, while the highest unemployment rate in developing country is Indonesia. China is a developed country and Vietnam is a developing country that have the lowest unemployment rate. Overall, the main reasons for unemployment in developing and developed economies are advances in Technology, Job Outsourcing, Demanddeficient unemployment, relocation, new and re-entering the workforce. Specifically, the unemployment rate in developing countries is not similar, it depends on the current situation of that country. However, the common problem that developing countries are facing is that the disparity between the labor force and factors such as lack of capital, lack of facilities and resources (Supriya Guru). Another factor is education level. For example, Vietnam is a developing country, and the economic growth rate is quite strong in recent year. Therefore, they tend to choose the suitable labor force. Specifically, young people with advanced degrees will have the opportunity to find jobs domestically and internationally. In addition, the inadequate

government policy support causes delays for people who start to do the private business (Cong Thuong 2018). Another example in the developed country is the UK where the unemployment rate in their country changes over time. Specifically, their unemployment rate soared in 1982 due to the war and in 1981 due to the economic recession. In particular, the worldwide economic recession in 2008 was the cause of the sharp increase in unemployment in this country (Tejvan Pettinger 2020). In addition, the Covid 19 situation in 2020 has caused the unemployment rate to rise. Because the employees were temporarily laid off due to the business were forced to close, and the demand of people dropped significantly. Moreover, people who were laid off temporarily are not necessarily getting hired again after the epidemic, so the risk of people losing their jobs permanently increases (Ekta Deshmukh 2020). The increase of the Corona virus is having a huge impact on the labor market. Meanwhile, the workforce in ecommerce and delivery is stable, in the tourism sector is stagnant. However, it is expected that if the vaccine is released, the labor market will recover rapidly in 2021 (David Payne 2020).

B. Are the challenges faced by developed and developing countries similar or different? United Kingdom (UK)’s unemployment rate dominant in 2009 among four countries, which was determined as cyclical unemployment that is due to economic cycle of the country. Particularly, World financial crisis 2009 had impacted significantly the financial sector of UK, which leads to 800,000 jobless cases at the end of 2009 (Gooberman, 2010). Then, these proportion started to decline sharply in 2011, which can be explained by the reduction of real wage (Business research methodology). However, the country still experiences the natural unemployment problems. Specifically, UK suffered structural unemployment due to the shifting from manufacturing based to service-based industry, which lead to the lack of suitable skill for high-tech job among people (Business research methodology). Also, as based on this site, UK experienced the frictional unemployment due to the time that need to be spent for people to find new jobs. Additionally, China is also a developed country that was affected by the 2009 financial crisis. Precisely, the recession accounted for the cyclical unemployment of China in 2009 since the crisis severely impacted the export activities of China, which resulted in the reduction toward labor force due to the company decision (Martin Hart-Landsbery, 2019). Then, the Unemployment rate decreased gradually from 4.72% to 4.28% between 2009 and 2018. However, the Unemployment rate

climbed to 4.32% in the next year. Specifically, this was the cyclical unemployment since the US-China trade war (2018) in terms of technology and cybersecurity had impacted strongly to the exports of China to America, therefore, this led to the reduction among labor force (Shi Yuuen, 2020). Indonesia is a developing country that had highest unemployment rate among the selected lists. According to Indonesia Investment, the booming of commodity era had led to large job creation domestically, which lessened the Unemployment rate from 2009 to 2011. However, among this period, Indonesia still experienced the structural unemployment, which was due to the lack of human capital in terms of educational skills and health since the shifting from agricultural to non-agricultural industry (Erna Puspadjuita, 2017). Additionally, frictional unemployment is the second type of jobless in Indonesia as the majorities of unemployed cases are educated students and they chose to be unemployed due to not doing the wishing jobs (International Labor Organization). However, Indonesia suffered the cyclical unemployment period from 2011 to 2015 due to the dependence on commodity export as the reduction in export activities led to the slowdown of Indonesia economy (Indonesia Investment). Besides that, Vietnam is the developing country that has the lowest unemployment rate among the selected country. As based on the research, Vietnam experienced high cyclical unemployment rate in 2009, which was due to the world financial crisis as Vietnam couldn’t export commodities in that period (Koushan D, 2018). Moreover, the unemployment rate grew steadily from 1.11 to 2.01 between 2010 and 2019. Specifically, Vietnam experienced the structural unemployment in this period due to lack of educational skills in order to adapt with the 4.0 Industry, consequently, large jobs have been replaced by machine (Koushan D, 2018).

Part C: Considering the global impact of the COVID_19 pandemic. 1. The impacts to specific components of the AD.

Figure 1: The general situation of 6 countries (The shift of SRAS curve due to COVID19)

Figure 2: The general situation of 6 countries (The shift of AD curve due to COVID19) UNITED KINGDOM: United Kingdom Consumption ($) Invest ($) Net Export ($)

Q4 2019 464,877,143,109.74 130,511,898,042.04 4,760,576,881.93

Q1 2020 452,777,116,586.53 129,176,216,157.39 670,561,272.02

(% Change) -1.31 -0.38 -75

Figure 3: The C I NX of Q4 2019 and Q1 2020 in United Kingdom. Source: Economic indicator. Comparing three components that are the consumption, Investment, and Net export between Q4 2019 and Q1 2020 in United Kingdom. The figure 1 shows that the Consumption of Q1 2020 is 1.31 % decrease compare to Q4 2019. Meanwhile, the investment and Net Export of Q1 2020 are down 0.38% and 75 % respectively compared to Q4 2019. Components in Q1 2020 were all decreased and especially, the Net Export drastically decreased, and the reason is the appearance of Covid 19 epidemic. During this time, many countries introduced export bans, abolishing export tax on some products. In addition, the closure of factories and limited relocation were the main reasons for the sharp decline in UK exports. The decrease in Net export meant that the aggregate supply also decreased. In addition, Covid 19 stopped the import and export of goods between countries. This leads to disruptions in the supply chain in the UK. Most UK business import the materials from many other countries, so when a pandemic occurs, they do not have alternatives such as other supplier to replace (KPMG 2020).

AUSTRALIA Australia Consumption ($) Investment ($) Net Export ($)

Q4 2019 211,192,123,469.93 83,910,134,570.06 10,455,409,412.30

Q1 2020 209,650,269,900.40 83,448,642,895.16 14,556,114,921.90

(%Change) -0.47 -0.27 16%

Figure 4: The C I NX of Q4 2019 and Q1 2020 in Australia Source: Economic Indicator The Component of Aggregate Demand are Consumption, Investment and Net export that are compared between Q4 2019 and Q1 2020 in Australia, the table above shows the percent change of consumption is minus 0.47 between Q4 2019 and Q1 2020, while the percent change in

Investment is minus 0.27. In addition, the Net export in Q1 2020 is increased to 16% compared Q4 2019, this is also the biggest change. In Q1 2020, while most countries show a decrease in Net export compare to 2019 due to the Covid Epidemic, this figure in Australia still increased, the reason is that the government has enacted an effective quarantine system, enhance health system. In addition, Australia allows the import of fresh food if having the export certificate, and the government has provided funding to increase the number of flights to support exports (Flander Trade 2020). The general problem, when the covid pandemic occurs, countries close and restrict import and export so lack of supply will occur, at this time the SRAS curve will shift to the left. However, when the vaccine is released and the pandemic is prevented, the supply will be increased again. MALAYSIA Malaysia Consumption ($) Investment ($) Net Export ($)

2019 (Q1) 53215927.13 19693436.79 7845720.8

2020 (Q1) 57284445.02 18790063.6 5173437.53

% change 3.68% -2.35% -20.53%

Figure 5: The C, I, NX and % change of Malaysia between Q1 2019 and Q1 2020 Source: Economic Indicator The three main required components of aggregate demand (AD) are Consumption, Investment and Net Exports, whose changing percentages are respectively 3.68%, -2.35% and –20.53%. The figure for changes of net export took the highest value comparing quarter 1 of 2019 and quarter 1 of 2020 since it decreased by 20.53% in one year. According to the EY Asean Assurance Leader, COVID19 had impacted significantly towards the supply chain and productivity of Malaysia since travelling restriction was enacted by the authorities. This affected severely on the export activities of Malaysia, which can be accounted by the demand-supply shocks between China and Malaysia since the trading activities has been deeply rooted for years (Institute of strategic and International studies Malaysia). Consequently, the AD curve will be shifted to the left, which lead to the reduction toward RGDP. Addi...