Policy Response to the Pandemic and Its Challenges: A Comparative Analysis of Australia and USA

This report provides a comparative analysis of the impact of COVID-19 on the economy of Australia and USA, examines the effect on trade and capital flow, evaluates the effectiveness of certain COVID-19 policies on the macroeconomic of both the countries, and explores the role of trade and capital flow in Australia and USA.

POLICY RESPONSE TO THE
PANDEMIC AND ITS
CHALLENGES A
COMPARATIVE ANALYSIS
OF AUSTRALIA AND USA

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Overview of impact of COVID-19 on the trade relationship Australia and USA:......................3
Study effectiveness of Covid policies on Macro-economy.........................................................5
Determine macro-economic interdependencies among Australia and USA................................6
Role of trade and capital flow in Australia and USA..................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The COVID-19 is one of the most powerful virus in human history, this pandemic
impacted almost every economy of the world. It has far-reaching spread of consequence of
health as well as on the economy, most of the country are now facing the recession period
(Gautam and Hens, 2020). It can be look at gross domestic product of global economy almost
shrunk by 4.4% in the year 2020. The intail stage of this pandemic impact the economy badly
because of lock down that effected the service sector of both the countries, in this report we will
understand the impact of COVID-19 on the economy of Australia and USA and examine the
effect on trade and capital flow. Later we will evaluate the effectiveness of certain COVID-19
policies on the macroeconomic of both the countries. At last, we will find out can cryptocurrency
help countries to recover the economy.
MAIN BODY
Overview of impact of COVID-19 on the trade relationship Australia and USA:
Australia is one of the liberal economy, they been admiring Westminster government
form. It is the one of the most successful country in the world (Hiscox, 2020). They are now
controlling the spread of COVID-19 with the help of stable political system, well-designed
national health system, geographic isolation and national wealth system of the country
contributed equally. However, the USA, did not take any early precaution as Australia did, hence
they face the most difficult time.
Free Trade Agreement link between Australia and USA:
The United States and Australia have very healthy and cooperative trade relationships, they
various done billions of dollars of trade with each other without any conflict (Jackson, 2016).
The both of the countries are under US-Australia Free Trade Agreement, commonly called
(FTA). The joint committee of both the country supervise and undertake certain action to
maintain good trade policies. Before the arrival of COVID-19, they both are having perfect
relationships but when the COVID-19 impacted the economy of both countries, the Trade
Agreement also got effected. This impact bring down all the previously donned trade agreement
such as import and export of agriculture goods, sanitary and phytosanitary trade matters, labour
and financial service,
Capital flow and trade statistics: Australia GDP was 1.3 trillion dollars in 2020. After the
impact of the pandemic the GDP come down by 4.2% and unbalanced the capital flow of the

country. US goods and service is 50 billion dollar alone with Australia in 2020. the export
relationships of the both the country is around 38.5 billion dollar and import relationships is
estimated to be 20.2 billion dollars alone in the year 2020.
Trade statistics: Australia is on the 21 rank with the largest trade partners of The USA,
according to the commerce department of The USA (Trade relationship, 2021). The impact of
COVID-19 bring down the growth of trade relationships between these two most stable
countries. The US foreign direct investment with Australia meant to be effected in past two
years. The USA and invested more than 98 billion dollars in stock of Australia, the report of
Australia foreign direct investment show that after the stability of economy The US tend to
decrease the investment on manufacturing units, technological service and finance service of the
Australia.
Sales of service: The USA tend to increase the sales of service majority with Australian
affiliated firms, on the other hand Australia tend to decrease the sales of service with The USA's
affiliated firms after the impact of COVID-19 (Çelik, 2021). The service sector of both countries
heavily impacted because of the lock down, service sector equally contribute to the development
of the country.
US-AUSTRALIA shared values: Australia is partner and very good friend of The USA, they
both have shared value, cultural value and common interest. Both of them tend to have stable
economy and vibrant academic relationships (Kelton, 2016). USA been operating its firm in
Australian market and tend to earn huge profit even after the impact of the COVID-19 pandemic.
The capital flow of the country tend to increase because of the interference of the USA in
Australian market. They both know the value of maintaining good relationships. The
International Monetary Fund (IMF) and World Trade Organization together take actively
participant in the development of both the economy of the country. Things are changed after the
impact of the pandemic, at the initial stages of the Lock down, both the countries tend to slow
down the process of import and export. The lock down effected almost very things between these
two country.
Future of Free Trade Agreement: after the impact of COVID-19 pandemic, both The USA and
Australia are now planning to rebuild the trade link that has been broken by the pandemic. They
both agree to undertake all the trade related criteria which include the fiscal policies,
manufacturing of goods and services, foreign direct investment and other important trade related

segments. Now they planning to increase the import and export relationship with third party, this
third party will get goods from both countries which is manufactured at one placed. They took
help of International Monetary Fund (IMF) and World Trade Organization, to overcome certain
issue that took rise in the COVID-19 period.
Study effectiveness of Covid policies on Macro-economy
In relevance to that Australia has said about exclusive package of money easing, that
consist of policy rate cuts and many others in which government of Australia purchased new
bonds. In 2020, overnight money rate of cash is targeted cut at 0.25% in month of March and
decline at 0.1% in November (Singh, Roca and Li, 2021). The interest rate on merchant bank
exchange compensation balances at bank. During period of Covid, in order to assure market
liquidity, institution of bank has managed repo rate and wider range of suitable complementary
for open market production. It is consisted of investment grade safety which is issued by non-
bank institution, it determined and conduct swap line with United States of America. In
accordance to U.S. Dollar liquidity is up-to $60 billion. In order to foothold, provision of credit,
mainly to small medium enterprise and facility is expended to $200 billion with the rate of 10
important sub points. The APRA has given short term relief from capital needs by allowing
banking institution to utilize few numbers of large intermediary. This provides an ongoing
leading towards macro-economy that gives minimum needs of capital that are met. The exchange
rate is provides an allowance regarding making flexibly to absorb trouble of economic that arise
in any period of time. Due to pandemic situation Australia affected badly as there are large
number of cases held on this country that impact on macro economy of UK.
USA case occurred in during pandemic situation that affected many lives and impact on
economy of country. It measures in area that is varied by state and geographical sectors. This
expands their treasury and agency safety in amount as required, that raises repo rate in an
overnight. By declining existing money of swap lines with dominant reserve bank and subsisted
maturity of production that wider dollar of United States of America (Brodeur and et.al, 2021).
The different facilities provided by it are commercial paper funds efficiency to facilitate
dispersion of bills of exchange by organizations and municipal. In Primary dealer credence
efficiency, that gives financing to Fed 24 market maker which is wealthy by broader range of
investment grade safety. Also, different facilities provided by them in order to make effective
pandemic situation in factor of macro economy that arises and effects badly due to Covid. As

many peoples lost their job and GDP also effected by pandemic that effects many things by
creating trouble for human beings. Municipal Liquidity facility to buy temporary cash precisely
from governments. Supervisory action, communal banking administrator that encouraged to
warehouse association. In order to use their capital and fluidity buffers to extend. To work with
asker that is affected by pandemic situation as impact on economic aspects of U.S. In accordance
to United States of America handling safety treasures and deposited at bank institution of
commercial.
Also, other measure taken to include offering administrative reporting alleviation and
adjusts framework of supervision to short term decreases scope and density of examination. By
providing additional time to get solution and overcome non-critical findings. As lower
community treasury ratio of leverage is 8%. In fiscal that is signed by regulations of America
Rescue Plan strategy, which gives other round of coronavirus rescue with predicted money of
$1,844bn that is approximately 8.8 percent of gross domestic product in year 2020. The president
of U.S signed amount for coronavirus relief and government funds of bill in according to part of
an act of current year.
In order to determine both Macro-economy condition of Australia and U.S their condition is
examined of effectiveness that regulated or due to Covid situation that impact on economy of
both countries in several ways. Due to impact on their growth and productiveness and is
measurable by studying of different functions. So, measure of taking into effectiveness this has
determined for both countries in order of making productive way of approach towards leading
business.
Determine macro-economic interdependencies among Australia and USA
There are macro-economic interlink between Australia and USA is economic that is
determined by exchange of financial resources. The financial medium of communication is
examined in macroeconomic policies. It derives from interest rates and fiscal policy who get
resolved by impact of financial elements (Sevinc and Mata Flores, 2021). As GDP of both
countries is higher by comparing with other, its plays an essential role in their interdependencies.
Due to pandemic situation that affected both countries in trading business by order of impact on
national economic procedures of countries. By their factors which are fiscal policy, international
monetary fund and many others that determines macro-economic interrelationship among
Australia and it trades partner of USA that grows in market sector and differentiated problems

and issues through various aspects of their. This factors helps in studying of macro economic
elements in order of expanding business through effective way by making interlink between two
countries that trades of products and services in tough time. Also, impact on various aspects of
their for regulating proper function in order to make productive approach for determining better
relationship in terms of their sector.
Macroeconomic factors such as investment, output and other elements due to which
economic growth affected by natural disaster takes place such as pandemic situation due to
which impact on trading business as no transportation facilities is available in Covid. As all
transportation are put on hold during pandemic because of which affects business of both
countries of Australia and USA. The financial interlink is more concerned with OECD that
presumed economic raises substantially over last two era (Milani, 2021). This includes foreign
direct investment by trading from Australia to USA by selling gross monetary outgrowths. Also,
trade interdependencies is observed in an international economic is selling. The exchange of
products and services among national budgetary is factor that exposure to variability of
international economy as both countries are from foreign. It trades is OECD core
interdependency through exchange of good from one place to another by trading of its. Due to
their interdependency it plays vital role in function of trading of products and services by making
better relationship with other and gains sustainability growth in their market. Through which
exports and import of services takes place effectively manner to enhance production of business
in positive manner. To trade good and services from Australia to USA many economic factors of
macro are determined such as trade, financial aspects and geographical area in which studies that
area is to be considered for economic function in country. So, can make effective approach of
delivering goods and services by trading from both countries that conduct a good relationship
among them. In order of enhancing their growth in market sector for expanding their services in
positive way towards getting examined in its aspect of exportation. As fiscal policy determine
both countries trading business in accordance to develop good infrastructure and raising
monetary policy. It determines that Australia and USA have interrelationship in factor for trading
of good and services.
In order to deduce about economic recovery as moving into 2022, by making world
development in through raising 5.7% for current year and 4.5% for 2022. By changing into little
manner made makes effective growth in production for making global growth to increase and

make again preventability that reduces because of pandemic situation that impact on growth of
economic. Macroeconomic supports is also required for long term procedure and employment is
to be recovered fully. By targeting on particular area helps in making growth in upcoming year
for trading business of Australia and USA. This is observed that economic deduction is taken
into consideration where provides growth for development economic by raising growth in
development for enhancing infrastructure that has affected because of pandemic situation. In
order to do so, fiscal policy remains adjustable for providing better services by which again
makes sustainable growth in an environment (Laurenceson, 2021). To deduce about economic
recovery, this measure has to be taken for growing country of Australia and USA in positive
manner. Through this provides base towards making deduction that helps in maintaining
economic recovery.
Role of trade and capital flow in Australia and USA
Trade- In production of goods and services, trade of Australia and USA plays an important role
by which export and import of services takes place. They both work in differentiated manner
towards expansion of their growth in developing many services for expands in manner towards
leading. Australia has deficit with rest of global by valuing products and services in import of
services with global market (Gregory, Salomons and Zierahn, 2021). Their role is change in
Australia trade equity, which impacts by types of products and services that export various
services in differentiate manner. Its play crucial role in trading of business towards making lead
and make country more suitable. While, USA economy has seen trade shortfall in which exports
and import of goods and services is examined that plays vital role in their economy of business.
As its trade exports about $539 billion in and so on that effect their economic growth in terms of
trade of business.
Capital flow- In order to determine both countries capital flow, it is seen that United States, is
making international flow in their capital of finance that enhanced their feasibility in funds. It
plays an interrelationship among flows of products and services through international level. This
is main aspect that signifies essential role of capital flow in production of services through
medium to expands funding by which gains profits in business (Forbes and Warnock, 2021). On
the other hand, Australia economy is seen as net beneficiary capital inflows and making high
investment in economy. In regard to making capital flow effective in towards managing capital
flow in its country through effective way. Capital inflow sustain for expanding of effective

capacity of Australia from past years. Also, foreign lender is conduct of holding debt safety in
proper way towards making preserved in an effective manner.
Globalization of trade- By keeping in mind about HBR, in order of decreasing trade of
globalization for policy productiveness and economic recovery in effective manner. As
organization moved for emphasizing things that are custom-made that provides global standard
for providing products and services to make it expands through global way. This helps in
enhancement of business of country through globally by productive way of approach. As global
industry plays significant role in towards getting success through long term procedure. This is
said under Harvard Business Review (Shenkar, Liang and Shenkar, 2021). In procedure of
globalization various things taking in mind such as cryptocurrency, transportation and other
aspects that required when trading products and services globally. It plays significant role for
making trade export and import effective for providing good service and makes effective role in
trading of business from one country to another as foreign direct investment.
Cryptocurrency make effective role in pandemic situation as emerging cryptocurrency are
rising for driven recoveries when the virus is getting fall off. It provides way towards making
rescue more people for making effective approach and make survival in Covid by recovery
through cryptocurrency. Also, fluctuation is takes place in during year of this currency for
various reasons but helps in recovery of cryptocurrency by making effective approach to other
countries. Digital economy plays significant role in during situation of pandemic by making
productive way for getting fast recovery by their role effectiveness.
CONCLUSION
In this report we have discussed the relationships of Australia and USA, both the country
have good relationships in term of trade and cultural activities. Australia and USA both have
vibrant economy and stable political environment. They have some common shared values and
common cultural understanding. Both the country The USA and Australia have good trade
relationships and doing business under FTA (Fair Trade Agreement). This report provides the
overview and assessment of the how COVID-19 impacted the trade relationships of the both the
countries. Later in this report we have evaluated the effectiveness of COVID policies on the
macroeconomic of both countries Australia and The USA. At last this report provide the
recovery polices that help both of them to overcome the impact of the pandemic.

REFERENCES
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