Australian Economy in tight corners after a decline in the global price of Iron Ore

However Iron is not just the major commodity that witnessed a sharp decline of about 40% in July. NAB’s Rodrigo Catril said, “Copper fell to its lowest price since April ($US8,894) down 1.92 percent.” He further added, “Risk aversion in the air has buoyed the greenback with pro-growth currencies bearing the brunt of it.” In the first phase, the growing demand in construction from the Chinese economy faced a shortage in the global supply as mines in Brazil went out of action due to the Pandemic. Once, Brazil recovered, the fall in the Chinese demand due to the upcoming Winter Olympics, the reduced rate in steel production, and widespread restriction due to Covid have resulted in a sharp fall in the prices of Iron Ore.  Taking cues from the disruption caused by Covid-19 in Brazil & China, Western Australia has imposed argent Covid 19 restrictions, as these mines are crucial for the economy’s revenue. The fall in the value of the Australian dollar usually makes the price of the imported commodities rise. The Reserve Bank seeks inflation in the Australian economy, however, it is not in the favor of a cost-push situation, where the wages of Australian workers are not increasing.