The Economic Impact of the Coronavirus Outbreak on Australia

This essay examines the economic impact of the Coronavirus outbreak on the Australian economy. It begins with an introduction to the pandemic and its global spread, followed by a discussion of the virus itself and its impact on Australia, including the number of cases and deaths. The core of the essay analyzes the economic consequences using established economic theories, such as supply and demand and the production possibility frontier (PPF). The analysis explores how the virus affects business and consumer confidence, trade relations (especially with China), investment, workforce, and overall economic output. The essay uses graphical illustrations to demonstrate the shifts in supply and demand curves and the inward shift in the PPF. The conclusion summarizes the key findings, emphasizing the decline in both consumer and business confidence, and the contraction of the economy due to the virus's impact on demand, supply, and production factors. The essay includes a comprehensive list of references to support its arguments.

Running head: ECONOMIC IMPACT OF CORONAVIRUS
Economic Impact of Coronavirus
Name of the Student
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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.

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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

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total supply of products in the market. As a result, the market of the products will contract
causing over economy to shrink. The graphical illustration of the scenario is given in figure 1
where both the supply and demand curve moved inward causing total output to fall.
Figure 2: Fall in output
Source: (Crated by the Author)
Theory of production possibility frontier (PPF)
The initial impact of the outbreak of novel Coronavirus would be on the investment
because outbreak of such viruses first hurt the consumer confidence and business confidence. As
a result, consumption decreases. The producers anticipates decline of consumption further in the
future and thus lowers investment any inventory or damage cost. Therefore, production is being
reduced from usual (Yang, Na and Ha 2019). The fall in investment lowers the amount of capital
investment of the economy. On the other hand, with increasing number of the victims the
working force gets affected. With the step of the government of Australia to restrict free roaming
of the people in order to quarantine the virus infected patients the amount. The in and out is
restricted and thus work is hampered in many cases as employees are not able to reach to their

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respective workplaces. Offices, educational and research institutions are forced to limit their
normal operation (Khan and Naushad, 2020). It has large impact on the workforce and
temporarily the workforce get reduced. Hence due to fall in the both the workforce and capital
the basic production factors there is an inward shift in the PPF as shown in figure 2 depicting that
there is decline in maximum possible output produced by the country.
Figure 2: Inward shift in
PPF
Source: (Crated by the Author)
Conclusion
The above discussion on the outbreak of Coronavirus and its impact on the economy of
Australia leads to the inference that due to this outbreak both the consumer and business
confidence has declined. These two are the major factors that has impacted the economy of the
country to contract. The non-price factors has declined the amount of both the demand and
supply in the economy and thereby contracts the output. On the other hand, due to fall in

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business confidence capital invested reduced and due to restriction by the government, there is a
temporary downward push on the labour force causing the entire the PPF of the country to shift
inward lowering total possible economic output.

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Reference
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