ECON6000 Current Economic Policy of Australia Assignment Sample

Economic Principles And Decision Making

The coronavirus pandemic which had started from a live animal market in the city of Wuhan, China this year has carried the whole devolved nations to a halt (Shereen et al., 2020). Due to gigantic escalation every single day it is getting almost impractical for the infection to curb and to put a full pause in its outspread. The whole sphere is rehearsing social dissociating and the countries nationwide have executed lockdown in their particular economies. Australia like other countries has also done a nationwide lockdown to suppress the infection but due to the lockdown, the financial exercises and operations directed have halted as a result of which the nation is confronting a grave danger on its economic conditions and stability. Presently, all together that the Australian economy does not go to a total delay the RBA (Reserve Bank of Australia) in the long stretch this year April’2020 has framed advances and guidelines to recuperate the financial condition and economy from turning out to be crushed and doomed completely (RBA, 2020). It is being foreseen and prognosticated that the economy is moving towards a change and transition to gradually plunge into a downturn stage for the foremost time through since most recent 29 years. Thus the study aims at analysing the present scenario of the Australian economy in these critical times.

Since with deference of the monetary steps and strategies by the financial body that is the RBA, it includes three financial bundles that altogether comprise a huge amount of 194$. This bundle of the economic package comprises of support and help to the families and big organizations, sponsorships and alleviation from charges, speculation impetuses and some other to a great extent centered steps have been undertaken in the highly influenced areas. It additionally includes in it back to the kid care to a large number of households up to1 million and for the tutoring of their small children. The bundle additionally contains backing to build up productively the health care framework so that Australia is fully prepared to battle the novel Covid-19. The financial advances undertaken by the legislature and the government officials in this emergency were not providing much as the regular compensation laborers and beggarly people households were getting a lot of assistance and support from the side of the administration in these strategies taken.

It is because a large number of people had lost their particular occupations and they did not have sufficient reserves and funds left to meet and satisfy their daily requirements. Along with this the buying power (purchasing power) among the general people additionally got diminished which subsequently followed to an immediate decline in the demand for the goods and other merchandise (Arun, 2020). With the reduction in aggregate demand, the consumption of commodities and services saw a sharp decrease. Presently with the fall sought after the harmony of the economy has gotten totally flimsy because of powerless joblessness. This had, at last, followed to a sharp decline in the GDP and development pace of the country as well as the economy.

What's worse if small scale budgetary and fiscal estimates dealt with by the RBA are additionally not at all lovely. A decrease in the policy rates in the economic package has been executed by the RBA.As a result of which 0.25% is the current cash rate which has followed to a lessening in the policy rates by 25 premise points. The decrease in the cash rates may take some action in the helping of the family units that are having home loans. Furthermore, it would provide a bit of motivation to share business people yet at the same time, it won't restore and stabilize the economy of Australia. This can be comprehended by dual ideas one being the "demand shock" and the other being the "supply shock" (ABC News, 2020). Moreover, the ongoing worldwide spread of the coronavirus, demand has diminished to a great extent as of now individuals are following and executing social isolation so general society isn't venturing out from their respective houses in the grocery and local stores to buy goods and services which will subsequently diminish the aggregate demand of the economy.

The worst part is if the cut in the policy rates isn't dealing with the demand shock then in what capacity will it manage to help the relating supply shock? Besides, individuals are likewise being deprived of their positions and employments which are eventually deteriorating the buying capacity of the general population, and now because individuals are getting fired from their occupations the economy is falling down hopelessly. The RBA itself has anticipated and they have the feeling that in this edgy situation of a pandemic of Covid-19 regardless of the means and strategies that are being taken and attempted by the legislature of Australia are not sufficient enough. It would lead to a large volume of decrease in companies fall outs and furthermore, notwithstanding this, the back payments would accordingly hop as it were.

In regard to huge proprietors with huge malls and shopping centers, the Covid-19 pandemic has influenced generally. It has lead to an intense and sharp fall in their respective incomes, their sales, and so forth. The pandemic has come about into buyers making a shift in their buys and demand to small-scale manufacturers and sellers. It will influence the proprietors in a way that they have to change their separate plans of action with the goal that they could keep up their place and standard in the present market situation and after the global health emergency circumstance, they could meet to the lost earrings and incomes. The pandemic of coronavirus infection has brought about a decrease of approximately 48% in the mall outings as uncovered by an investigation directed by InMobi in the Australian economy.

In such an environment of a crisis and pandemic that the world is facing it will have a huge influence on the behavior of consumers as well. The demand for consumer and durable goods has increased to a large extent in comparison to that of luxury goods. The necessities are being traded at raised rates due to shortage in supply and because of the lockdown. The public is getting more inclined to purchasing essential commodities like food, face shields, masks, etc. Instead of going to purchase bikes, cycles, cars, etc. Moreover, the small and middle-class families have limited their expenditures in buying commodities and they are trying to sustain their living by compromising their expenses. Due to the coronavirus, offline shopping is seen to gain more popularity in comparison to online marketing. This is because the general public is trying to avoid going out on the roads to purchase the required commodities (Jhinghan, 2016).

The lockdown has additionally brought about the flooding decay of the financial development rate and the GDP of the nation which depicts the fact that individuals don't have work and are jobless on account of the nationwide lockdown. The coronavirus has brought about hampering different areas like the avionics, the travel industry, food business, and manufacturing industry, and so on (Peterson and Arun, 2020). All the staff and workers identified with these parts of industries are currently in the line of the danger of either losing their positions or have just been terminated.

If the market scenario of Australia is taken into consideration then it has seen a huge crash in the global market structures. If the Australian stock exchange is seen then it has seen the most rapid fall of over 30% in history (Investor Daily, 2020). The Australian dollar saw a decline in respect of the US dollar to 55$US which is certainly not a good sign for the economy of Australia. It is certainly not good for heavy goods. But recently it has appreciated a little to 69$ which is definitely a good thing for the economy (Ibis World, 2020).

Also if the property merchandise and industry is taken into respect and thought in the forthcoming months it will, in the long run, be encountering a huge threat and risk as to the demand for agreeable and all around outfitted houses will prone to get diminished as the frequency of discredit value would increment if the paces of homes begin to decline at such a fast scale (Pursuit, 2020). Indeed, even with the financial bundle and economic relief package the administration and government despite everything are by all accounts uncertain and dubious of the direction of the economy's unsettling influences and impact which it is suffering because of the widespread of novel coronavirus and the big question is how the financial-economic condition will once more recoup from such a profound stagnation and phase of depression.

Because of the lethal Covid-19 spread, the chain of supply has additionally been hampered. Numerous manufacturing plants and factories have been closed and shut down due to the lockdown. As per McKinsey (2020) in their most recent investigation, they have uncovered that because of the lockdown the economy has gotten totally temperamental and is falling gravely. As a result of which demand has succumbed to the products. In their survey, they estimated that in Australia in the month of May, 30-70% of the buyers in the country have experienced a reduction in their respective incomes. Presently, the organizations and big multinational manufacturing units can't deal with their overhead expenditures and costs, and because of which individuals are losing their positions and jobs.

Furthermore, the administration of Australia has the opinion that in the current crucial conditions and situation of a savage pandemic out of five households only a single household is having adequate cash and assets to tackle and survive through this deadly disease in the coming time frame. Clarifying it the Australian officials took the idea of "pocket of vulnerabilities" (Reuters, 2020). Covid-19 has gotten a handle on over the biggest markets in the country of Australia involving Melbourne and Sydney as the sale volumes and the clearance sums have flooded definitely in these two gigantic cities. Since, September ‘2019 the country of Australia battling with the foundations of joblessness.

Presently the state of joblessness has gotten considerably more disintegrated because of the deadly Covid-19 as the joblessness percent have seen a flooding ascent of an estimate 6.2% because of the current financial emergency in the nation (The Guardian, 2020). As per, The Guardian (2020) in this year in Australia a greater part of around 600,000 employments have been lost by individuals. Presently because of lockdown this year, the large number of individuals lost their positions in 2020 in Canberra the estimates was very stunning and upsetting. Presently likewise, according to the, The Hindu the positions lost for this present year in the long stretch of April were smashing all the past records in history. Notwithstanding this because of the on-going situation, it has made an obstructive effect on the factor market of labor also which is moreover improbable to improvise too in the forthcoming time frame (The Hindu, 2020).

Some of the most prominent big companies like Virgin Australia Airlines, Qantas Airways, Coca-Cola, etc have experienced huge losses due to the outbreak of the coronavirus in the nation (OMR Global, 2020). Most of these multinational companies have stopped their production process and have shut down a major number of factories and warehouses. This has happened due to a sharp decrease in the demand for the goods and services provided by these companies to the consumers.

Communicating in the concepts of economics in a vicious cycle of feeble employment it follows to a lot more vulnerable demand enhancing a substantially more powerless supply side that will consequently accompany the damaged level of living which will, in the end, follow to a more vulnerable monetary and economic development in the economy (Jhinghan, 2016). Furthermore, the investment would be diminished undeniably which will additionally direct to significantly more decreased generation of services and employments accompanied by a considerably fall apart skillful improvement among the laborers and workers which will thusly hamper the gainful capacity and limit that the economy involves in it (Tandon, 2020).

Rod Slims in the conference of Australian Financial Review Banking & Wealth Summit Briefing he says that the invisible hand will work only if the manufacturers will come face to face with competition in the market of Australia (Australian Competition & Consumer Commission, 2020). He thinks that the economy can sustain the current crisis and make the invisible hand work with certain steps if they are undertaken wisely which includes certain monetary and economic reforms and efforts. 

The International Monetary Fund (IMF) has anticipated a 3% decay in 2020 in the entire world economies (International Monetary Fund, 2020). IMF additionally forecasted that in the country of Australia because of the present circumstance and emergency the joblessness pace is relied upon to go a lot higher to a great extent of up to10% in the long stretch in June. Australian economy has likewise observed a decrease in the supply, demand, consumption of services, and various products. Moreover, the foreign direct investment in the firm space is anticipated to fall strongly by and large of around 18%. As far as Australia is concerned according to Falvio Romano (2020) in his study in these times of the corona the economy of Australia is likely to reduce by an estimate of 15% in its gross domestic product (GDP).

Notwithstanding this the financial emergency which has ascended in Australia because of the deadly spread of the novel Covid-19 will likewise severely affect and impact the savings of individuals as though the lockdown and the coronavirus stay for a more drawn out timeframe then this will prompt a decline in the marginal propensity of consumption. This thusly will bring about expanded unemployment and joblessness in the country that will assist and further prompt ascent in the inclinations for savings as a careful and precautionary effort and strategy by general society. This, in the long run, will sway on the investments undertaken done by the general population and the economy will get flimsy and completely unbalanced (VOX CPR Policy Portal, 2020).

 Thus, the strategies and efforts were undertaken and that is being executed by the RBA and the legislature in Australia will not be of much assistance to help the measure of development in the economy of Australia. The approaches are of no help because the destitute and the beggarly and poverty-stricken are not getting any favorable circumstances with it that will in the end eventually harm economic growth and financial development. Along with the huge monetary bundle that the legislature declared it despite everything is by all accounts very in an issue and uncertain of the patterns and pace of the economies stuns which it is looking because of the current situation of the fatal infection of crown infection and how the money related framework and economy will restore again from such colossal wretchedness. With the above discussion it is evident that the current economic position of Australia is not in a good place despite the efforts undertaken by the government and the pandemic has brought a unimaginable effect on the economic stability and growth of the country.

References for Economic Principles And Decision Making

ABC News. (2020). RBA interest rate cuts won't save the economy from coronavirus, but there are policies that may. Retrieved from https://www.abc.net.au/news/2020-03-04/interest-rate-cuts-wont-help-coronavirus-hit-firms-economies/12020208

Arun, K. (2020). Impact of covid-19 and what needs to be done. Economic & Political Weekly, 55(4), 23-26.

Australian Competition & Consumer Commission. (2020). Will competition survive the current crisis? Retrieved from https://www.accc.gov.au/speech/will-competition-survive-the-current-crises

Ibis World. (2020). What happened to the australian dollar in march? Retrieved from https://www.ibisworld.com/industry-insider/analyst-insights/what-happened-to-the-australian-dollar-in-march/

International Monetary Fund. (2020). The IMF and COVID-19. Retrieved from https://www.imf.org/en/Topics/imf-and- covid19

Investor Daily. (2020). Market update: Impact of COVID-19. Retrieved from https://www.investordaily.com.au/analysis/46792-market-update-impact-of-covid-19

Jhinghan, M. L. (2016). Micro economic theory. Vrinda Publications.

Mc Kinsey. (2020). Emerging from covid-19: Australians embrace their values. Retrieved from https://www.mckinsey.com/industries/retail/our-insights/emerging-from-covid-19-australians-embrace-their-values

OMR Global. (2020). Impact of COVID-19 on australia economy, deviation & trends analysis report, by verticals (energy, healthcare, retail & e-commerce, agribusiness & Food, aviation, manufacturing, travel & tourism, others) and forecast 2019-2025. Retrieved from https://www.omrglobal.com/industry-reports/impact-of-covid-19-on-australia-economy

Peterson, K.O. & Arun, T. (2020). Spillover of COVID-19: impact on the global economy. SSRN Electronic Journal, 3, 65-69, DOI: 10.2139/ssrn.3562570

Pursuit. (2020). The impact of Covid-19 on Australia’s housing market. Retrieved from https://pursuit.unimelb.edu.au/articles/the-impact-of-covid-19-on-australia-s-housing-market

RBA. (2020). The covid-19 pandemic is causing significant strains in the global financial system. Retrieved from https://www.rba.gov.au/publications/fsr/2020/apr/overview.html

Reuters. (2020). RBA says Australia banks able to weather pandemic shock, warns of some risk. Retrieved from https://in.reuters.com/article/us-health-coronavirus-rba-finanacial/rba-says-australia-banks-able-to-weather-pandemic-shock-warns-of-some-risks-idINKCN21R069

Romano, F. (2020). An estimate of the economic impact of COVID-19 in australia. SSRN Electronic Journal. https://dx.doi.org/10.2139/ssrn.3581382

Shereen, M.A., Khan, S., Kazmi, A., Bashir, N. & Siddique, R. (2020). COVID-19 infection: Origin, transmission and characteristics of human coronaviruses. Journal of Advanced Research, 24, 91-98, https://doi.org/10.1016/j.jare.2020.03.005

Tandon, P. (2020). COVID-19: Impact on health of people and wealth of nations. Indian Journal of Medical Research. 151, 121-123.

The Guardian. (2020). Unemployment rate in Australia jumps to 6.2% due to covid-19 as 6000,000 jobs lost. Retrieved from https://www.theguardian.com/business/2020/may/14/unemployment-rate-in-australia-jumps-to-62-due-to-covid-19-as-600000-jobs-lost

The Hindu. (2020). Australia rate at 5 year high. Retrieved from https://www.thehindu.com/news/international/australia-unemployment-rate-at-5-year-high/article31579443.ece

VOX CPR Policy Portal. (2020). The impact of covid-19 on the equilibrium interest rate. Retrieved from https://voxeu.org/article/impact-covid-19-crisis-equilibrium-interest-rate

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