Economic Consequences of the COVID-19 Outbreak

Running head: ECONOMIC IMPACT OF CORONAVIRUS
Economic Impact of Coronavirus
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ECONOMIC IMPACT OF CORONAVIRUS1
Introduction
The outbreak of Coronavirus that started in China has now taken the form of a pandemic.
It is spreading all over the world at a considerable pace. All the countries are taking step towards
curbing the spread of virus by restricting in and out of people as well as product from foreign
countries (Wang et al. 2020). Due to this, trade is getting strongly affected. Domestically people
being cautious and limiting their consumption. All these will have impact on the economy. This
essay studies the impact of Coronavirus on the economy of Australia since the country has been
engaged strongly with many countries, especially China.
Discussion of the Coronavirus
The spread of novel Coronavirus started in Wuhan, China in December of 2019.
Coronavirus impacts the respiratory system of victims after being exposed to the virus for about
two weeks (Hui et al. 2020). World Health Organization (WHO) recognized the spread of
Coronavirus as pandemic on 11th March 2020. Till date 182, 368 cases of Coronavirus have
been identified all around the world. Number of deaths recorded are 7, 144. It is evident from the
data that Coronavirus is taking the form of bigger threat with passage of every single day. It is
spreading at an increasing rate both in the areas of identified cases and number of deaths caused
by it (Who.int 2020). The concerned country in this essay, Australia has been affected by
Coronavirus too. The number of identified cases of Coronavirus in Australia has reached 401
with number of deaths increased to 5. Additionally, there are cases of 27 recovery in the country.
The main problem of the Corona virus is that there is no antidote to counter it. It is affecting the
person belonging to high age group. Australia has more than 6 million population over the age of
55 years (Abs.go.au. 2020). Therefore, it can be said that the country would be affected
economically due to spread of Coronavirus since a pandemic impacts in various ways.

ECONOMIC IMPACT OF CORONAVIRUS2
Economic theories describing the impact of the Coronavirus
Owing to spread of Coronavirus and attempt to contain it, the countries in the world are
not allowing any entry or exit of people to and from the countries. The restriction has impacted
the product market all around the world including Australia. The economy of Australia would be
hugely impacted as it shares high trade relations with China. The export sector of the country
would be affected much adversely. In addition to that, the import sector would be hampered too.
Theory of demand and supply
The government of Australia is trying to curb the spread on Coronavirus in the country
but it is estimated that the impact of the virus on the economy of the country cannot be recovered
before spending a decade. The outbreak of the virus has impacted the business confidence
significantly (Binder 2020). The case is similar for consumer confidence. Reduction in flight
capacity and the threat in other countries restriction the employees and business persons from
travelling in or out the country (Svensson 2017). The tourism sector gets affected by this and due
to that, consumption would decline. Consequently, the market size of the economy shrink.
Coronavirus would probably cause death of many and that would reduce the population of the
country. Due to lower business confidence, job opportunities will gradually fall and subsequently
the income of people will decrease that will further lower consumption demand (Inoua and Smith
2020). With this continuously growing the rate of Coronavirus, the future expectations of both
the consumers and producers will decline. Due to this, the demand of the economy of the country
will decline. The factors that cause the demand to fall are all the non-price factors. The non-price
factor majorly the market size, available income and future expectation is affected by the
Coronavirus outbreak. On the other hand, the cost factors and availability of factors are impacted
by the Coronavirus outbreak. Hence, the fall in supply of production factors would reduce the