The procedures and endeavors that were attempted and that is being executed by the RBA and the governing body in Australia won't be of much help to help the proportion of advancement in the economy of Australia in light of the pandemic that it is currently experiencing. The methodologies are of no assistance because the dejected and the flat broke and destitution stricken are not getting any great conditions with it that will at long last in the end hurt monetary development and money related turn of events. Alongside the immense fiscal group that the RBA announced it despite everything is apparently in an issue and questionable of the examples and pace of the economies dazes which it is looking. An outcome of the ongoing circumstance of the lethal disease due to Covid-19 contamination and how the cash related structure and economy will re-establish again from such monster horror. With the below conversation it will be clear that the current financial situation of Australia isn't in a decent spot despite the endeavors embraced by the legislature and the pandemic has welcomed an inconceivable impact on the monetary soundness and development of the nation. Also, if the suggestions recommended seeing the pandemic situation is put into place then it can bring in a small amount of change that the country is facing. For example, a high amount of expenditure on spending from the government, restructuring the tax structure of the country, giving incentives to small scale traders to enhance the investments, etc.
Australia is one of the emerging economies of the world that is on the way to become a developed economy. GDP of Australia in the year 2019 is estimated to be $1.89 trillion. Due to this Australia is the 13th largest economy in the world based on nominal GDP. If we talk about the international trade then Australia is the 25th biggest exporter of goods and 20th biggest importer of goods in the world. GDP per capita in Australia is equal to 52,379 in year 2018 and this year GDP growth rate in Australia is equal to 2.7%. Inflation and unemployment rate in Australia is equivalent to 2% and 5.7% respectively.
The pandemic of Covid-19 which had begun from a live creature market in the city of Wuhan, China this year has conveyed the entire regressed countries to an end (Shereen et al., 2020). Because of huge acceleration every day it is getting practically unrealistic for the contamination to control and to place a full respite in its extended. The entire circle is practicing social separating and the nations across the nation have executed lockdown in their specific economies. Australia like different nations has additionally done an across the nation lockdown to stifle the contamination however because of the lockdown, the money related activities and tasks coordinated have ended as a consequence of which the country is going up against a grave risk on its financial conditions and solidness. By and by, all together that the Australian economy does not go to an absolute postpone the RBA (Reserve Bank of Australia) in the extended length this year April'2020 has surrounded advances and rules to restore the money related condition and economy from ending up being squashed and destined totally (RBA, 2020). It is being forecasted that the economy is moving towards a change and progress to step by step dive into a downturn stage for the chief time through since latest 29 years .Australia is one of the biggest markets in the world. After the Coronavirus pandemic, Australia's aggregate demand decreased because of a decrease in the income level of the peoples in the economy. As a result, production level decreases and unemployment level increases. Many fiscal packages announced by the different states in Australia to fight this pandemic. One of them is the relief package by the Australian government which is worth $45 million.
Since with regard of the monetary related advances and methodologies by the monetary body that is the RBA, it incorporates three budgetary groups that by and large contain a gigantic measure of 194$. This heap of the monetary bundle involves backing and help to the families and enormous associations, sponsorships and lightening from charges, hypothesis impulses and some other generally focused advances have been attempted in the exceptionally influenced regions. It furthermore remembers for it back to the kid care to an enormous number of family units up to1 million and for the coaching of their little kids. The pack furthermore contains sponsorship to develop profitably the medicinal services system so Australia is completely arranged to fight the novel Covid-19. The monetary advances embraced by the assembly and the administration authorities in this crisis were not giving much as the ordinary remuneration workers and flat broke individuals family units were getting a ton of help and backing from the side of the organization in these methodologies taken. It is because an enormous number of individuals had lost their specific occupations and they didn't have adequate holds and assets left to meet and fulfil their day by day prerequisites. Alongside this the purchasing power (buying power) among the overall individuals furthermore got lessened which in this way followed to a prompt decrease in the interest for the products and other product (Arun, 2020). With the decrease in total demand, the utilization of products and administrations saw a sharp abatement even though if the prices were decreased the demand still did not raise much. By and by with the fall looked for after the concordance of the economy has gotten wobbly because of frail joblessness. This had, finally, followed to a sharp decrease in the GDP and advancement pace of the nation just as the economy.
What's more regrettable if little scope budgetary and monetary appraisals managed by the RBA are furthermore not in any manner beautiful. A diminishing in the policy rates in the monetary package has been executed by the RBA. As a consequence of which 0.25% is the present cash rate which has followed to a reducing in the policy rates by 25 reason focuses. The decline in the money rates may make some move in the aiding of the nuclear families that are having home advances. Moreover, it would give a touch of inspiration to share businessmen yet simultaneously; it won't re-establish and balance out the economy of Australia. This can be fathomed by double thoughts one being the demand disturbance and the other being the supply disturbance (ABC News, 2020). Additionally, the progressing overall spread of the Covid-19; request has lessened by and large starting at now individuals are implementing and executing social seclusion so broad society isn't wandering out from their houses in the staple and nearby stores to purchase merchandise and enterprises which will accordingly reduce the total demand of the economy. The most exceedingly awful part is if the cut in the arrangement rates isn't managing the demand disturbance then in what limit will it figure out how to enable the identifying with supply disturbance? Also, people are in like manner being denied of their positions and livelihoods which are in the long run decaying the purchasing limit of everyone and now since people are getting terminated from their occupations the economy is tumbling down pitifully (Jhinghan, 2016). The RBA itself has foreseen and they incline that in this restless circumstance of a pandemic of Covid-19 paying little mind to the methods and procedures that are being taken and endeavoured by the assembly of Australia are not adequate. It would prompt an enormous volume of diminishing in organizations fall outs and besides, despite this, the back instalments would likewise bounce figuratively speaking.
Most definitely as per Falvio Romano (2020) in his investigation in this season of the covid-19 the economy of Australia is probably going to decrease by a gauge of 15% in its total national output (GDP). As per the Australian Bureau of Statistics (2020) the unemployment rate is pretty high as a result of this crisis at 5.1%.
Imparting in the ideas of economical aspects in a vicious cycle of weak employment it follows to much more weak demand of goods improving a significantly feebler supply side that will thus go with the harmed degree of living which will, at long last, follow to a more weak money related and monetary improvement in the economy (Jhinghan, 2016). Moreover, the speculation would be reduced unquestionably which will also direct to altogether more diminished formation of employment opportunities and occupations joined by a significantly self-destructible improvement among the workers and laborers which will in this manner hamper the productive limit and breaking point that the economy includes in it (Tandon, 2020).
As compared to Australia, India's GDP growth is equal to $5 trillion as India is the bigger economy as compared to Australia. Unlike Australia, India announced a package for the whole country which means that there is a single package same for all region.
The Prime Minister of India Mr. Narendra Modi announced the overall stimulus package of $280 billion which is 10% of GDP on 12th may (Times of India, 2020). The total stimulus package cost $214 billion which is 11 percent of Australia GDP. In India the government of India spends directly on food, cooking gas and income transfers to poor people which are account of 1.9 percent of GDP. The extra funds 150 billion rupees will be given to the healthcare sector to improve its infrastructure. Other measures are taken to support the business and increase the liquidity in many sectors, the government provide the credit support to business which is accounted 1.9 percent of GDP, electricity companies (0.4 percent of GDP) and agriculture sector (0.7 percent of GDP). The Reserve Bank of India reduces its repo and reserve repo rates to 4 and 3.35 percent, respectively. The NABARD, SIDBI and, NHB receive the Rs 50,000 crore financial help from RBI. According to the Finance Secretary of India, the economic indicators are showing growth at faster rate than anticipated and Economic Affair Secretary expects a V-shaped recovery in India (The Hindu, 2020). But despite all these measures there has been a decline in the tourism industry, aviation sector, food business etc. Unemployment rate after Covid 19 in India has been rose from 6.7% to 26%.
If we compare it with Australia, the total stimulus package cost $214 billion which is 11 percent of Australia GDP. The Australian government provides extra unemployment benefits to jobseekers for six months; they receive extra $550 per fortnight for next six months. Wage subsidies are given to the business so that they keep the employees in the business (RBA, 2020). The Air and space transport industry like Airlines will get $715 million support from government and Child care subsidy which cost around $1.6 billion has been implemented. The Reserve Bank of Australia reduces the cash rate to 0.25% and increases the quantitative easing.
However, both countries had fought against this pandemic by taking various policy options. But the impact of these measures will only superficial as it was not doing much benefit to the common man and daily wage earners. As in both the countries there has been a surge in the rates of unemployment over the last few months as a result of the worldwide outbreak of the novel coronavirus infection.
Due to the ongoing pandemic COVID -19, the economic stability of Australia is affected in such that the economy is not the same as before. The Australian economy has been suffering drastically since September 2019. Now, due to the outbreak of the virus the unemployment rates have surged which has decreased the purchasing power of the consumers since they have the lost their jobs. The government in such critical times should try and create more job opportunities for people who have lost their jobs (The Guardian, 2020).
To mitigate for future and current economy, the government should consider of Incentivising homes to ensure that they get efficient energy and powers to use since is an issue of working from home and keeping social distance. No matter the fact of lock down, the economy will try to pick up with time if people work. Secondly the government should develop infrastructures that will encourage cycling and walking since with air pollution and overcrowding at the public accelerates the spread (AMP, 2020). Thirdly the government should ensure that educations to people are done on measures and controls against COVID-19.This will help since people will get back to their businesses and work considering the rules set and consequences. In this case reopening of the economy occurs once the preventive measures are adhered to.
Also in addition to this, another recommendation that would be to revive and restore confidence in the Australian economy would be to invest heavily in infrastructure especially telecommunications (Sullivan, Rahamathulla and Pawar, 2020). This would ensure people embrace technology in doing business which would open up new job opportunities and revive the economy. Another recommendation would be to revisit the tax structure and look into broader ways of collecting revenue. This would include the re-introduction of already relaxed taxed and increase in taxation of thriving sectors in the economy. In short, the government should decrease the tax rate. This will enable the people in the economy to have more money at their disposal to spend and this will lead to increase in demand of goods and services in the economy thus economic growth. It can be elaborated as when the government reduces the tax rate people will earn more at their workplaces which they will spend and invest causing economic growth after the decrease in economic growth caused by COVID-19.
The government should also increase its spending, this will increase the circulation of money in the economy which will increase the demand of goods in the economy thus increase in economic growth. It can be explained as if increase in government expenditure increases the amount of money that will be in the economy thus increasing the demand of goods and services leading to increase in employment to help in the production of goods and services to meet the higher demand and therefore there will be increase in economic development after the decrease in economic growth caused by COVID-19. Whereas if people are concerned, the people should work for more hours ,this will help to increase the number of goods and services produced in the economy as well as effective utilization of the resources in the economy hence increase in economic growth (PWC, 2020). When people work for more hours their will adequate and effective utilization of the resources in the economy i.e. reduction in unemployment of resources .This will lead to increase in economic growth after the economic damage caused by COVID-19.
Apart from this, many countries have banned international flights so the tourism sector has been gravely affected as a result of this. So to propagate and develop the tourism industry in Australia the government should take up more initiatives and policies to develop the domestic travel in Australia (The Guardian, 2020).
Thus, these suggestions would help the Australian economy come back to its normal self and the pace of economy will help restore back as it was previously. It will also help in regaining the people’s confidence as it would benefit them directly and would help them in maintaining their standard of living and quality of life.
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
AMP. (2020). How the Australian economy will recover from Covid-19 and how long will it take? Retrieved from https://www.amp.com.au/insights/COVID-19/australian-economy-recover-after-covid-19
Arun, K. (2020). Impact of covid-19 and what needs to be done. Economic & Political Weekly, 55(4), 23-26.
Australian Bureau of Statistics. (2020). Labour force Australia. Retrieved from https://www.abs.gov.au/ausstats/abs@.nsf/lookup/6202.0Media%20Release1Feb%202020#:~:text=am%20(Canberra%20Time)-,Trend%20unemployment%20rate%20remained%20steady%20at%205.1%25,of%20Statistics%20(ABS)%20today.
Jhinghan, M. L. (2016). Micro economic theory. Vrinda Publications.
PWC. (2020). The possible economic consequences of the novel coronavirus pandemic. Retrieved from https://www.pwc.com.au/publications/australia-matters/economic-consequences-coronavirus-COVID-19-pandemic.pdf
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
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
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
Sullivan, D., Rahamathulla, M. & Pawar, M. (2020). The impact and implications of Covid-19: An Australian perspective. The International Journal of Community and Social Development, 2(2), 134-151.
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). Experts on how coronavirus will wallop Australia’s economy- and what the government must do. Retrieved from https://www.theguardian.com/business/commentisfree/2020/mar/11/four-experts-on-how-coronavirus-will-wallop-australias-economy-and-what-the-government-must-do
The Guardian. (2020). Morrison government flags incentives for Australians to take domestic holidays to save tourism industry. Retrieved from https://www.theguardian.com/australia-news/2020/jun/20/morrison-government-flags-incentives-for-australians-to-take-domestic-holidays-to-save-tourism-industry?CMP=Share_iOSApp_Other
The Hindu. (2020). Economic stimulus package. Retrieved from https://www.thehindu.com/news/resources/economic-stimulus-package-details-of-20-lakh-crore-package-announced-by-union-finance-minister-nirmala-sitharaman-in-five-tranches/article31606806.ece
Times of India. (2020). Government’s economic package only 1% of GDP, says analyst. Retrieved from https://timesofindia.indiatimes.com/business/india-business/govts-eco-package-only-1-of-gdp-say-analysts/articleshow/75837840.cms
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