Analyzing the Global Financial Crisis and its Impact on Australia

This essay provides an overview of the Global Financial Crisis (GFC), focusing on its causes, spread, and impact on the Australian economy. It examines how the COVID-19 pandemic triggered a global economic downturn, leading to increased public debt and economic challenges for countries worldwide. The analysis highlights the specific effects on Australia, including mortality rates, household consumption changes, and unemployment rates. The essay incorporates data from the Australian Bureau of Statistics, utilizing GDP chain volume measures to illustrate the economic impact. It further discusses the policy responses implemented by the Australian government to mitigate the crisis, including fiscal policies targeting healthcare spending and support for households and businesses. The IS-LM model is used to demonstrate the impact of the GFC on interest rates and gross disposable income, concluding that COVID-19 is a global crisis that has significantly impacted Australia and other nations.

GLOBAL FINANCIAL
CRISES

INTRODUCTION
Global financial crises refers to the financial crises which affect various countries at the
same time. It refers to the period of difficulties which the financial organizations and financial
institutes experiences simultaneously (Covid, C.D.C. and et.al., 2020).
EVENT OVERVIEW
COVID-19 have become the global Financial crisis which have hit the global economies
adversely. Corona Virus is the disease which spread through the nose and mouth. The disease
spreads with breath which is too small for the human eyes to see and attack the near people. The
COVID-19 pandemic have presented the unprecedented the set of health and various other
increasing economic challenges for the countries all across the globe.
How GFC became a global crisis
COVID-19 has been considered as a public health threat but also an economic threat. The
virus triggered a recession in a lot of countries and declared the annual growth way lower which
is taken as a recessionary threshold for the global economy. From the scale of human movement
the virus spread further all across the world. It was said by some experts that the crises was
predictable. The COVID-19 pandemic caused high levels of public debts and other additional
pressures on all the major resources of development finance (Lopez Bernal, J. and et.al., 2021).
Also the low and middle income countries have struggled yo finance their financial health and
social and economic responses to respond to global financial crises. The impact of COVID-19
has continued to diverse all across the globe over the June 2021. GDP remained below pre-
pandemic levels but many economies have recorded a strong growth .
key impacts on Australian economy
Like other countries, Australia has also face various impacts and implications of COVID-
19, global crises. The COVID-19 crisis has been considered as 38th leading cause of death in
Australia. The emergence of COVID-19 and its health effects made tracking or mortality much
more important than it ever was. The deaths from COVID-19 have highlighted the broader
effects of the disease and the pandemic and health service delivery too. It was seen that 898
deaths were reported from the COVID-19 crises in 2020.
In the June 2021, several short lock-down across the Australia were measured. The visits
and the lengths of stay have changed which are related to pre-pandemic mobility. The amount of
time spend by people at home increased (Mo, P. and et.al, 2020). Various changes in retail and

recreation mobility and the household consumptions raised. Some states recorded the smallest
increase in the household consumption. In the Queensland household consumption was derived
through spendings on travel, operation of vehicles and the gas, electricity and other fuels. Retail
and recreation categories of household consumptions fell. Growth in the transit station mobility
and the consumption of transport services was also reported.
In the chart the reference year for chain volume measure is year 2018-2019. The
Australian economy rose 0.7% in its seasonally adjusted chain volume measures and the GDP
rose to 1.4 for the global financial crises of COVID-19 in the years 2020-2021. also the terms of
trade rose to 7.0% and the household serving ration decreased from 1.6 to 9.7%. Despite being
the COVID-19 pandemic the public investment continued to grow and reached its highest level
in the series (Welcome to the Australian Bureau of Statistics, 2021). The government of Australia
invested in new assets expect one off impact of asset sales and other transfers, was the key
contributor to public investment growth in three recent quarters. The government increased the
investment by state and local government evident in the engineering and building constructions.
The post COVID-19 financial crises adjusted estimates for September 2021 recorded increase in
unemployment rates by 4.6%. the employment decreases up-to 12,884600. the monthly worked
10%
10%
11%
11%
3% 12% 1%
1%
11%
31%
GDP GDP per capita (c)
Gross value added market
sector (d)
Real net national disposable
income
Productivity Productivity GDP per hour
worked
Productivity Real unit labour
costs
Prices
Prices GDP chain price index
(original)
Prices Terms of trade
Current price measures Current price measures GDP
Current price measures
Household saving ratio

hours increased by 15 million hours while the under-employment rate decreased to 9.2%. it was
reported that employment to population ration also decreased to 61.5%.
IS-LM analysis
Impact of the GFC
Due to COVID-19 global financial crisis, the ownership transfer costs increased up-to
10.0% which reflected low interest rates in the household market. The Gross disposable income
fell to 0.3% while the savings fell because of riser in the household consumption. A rise of 1.2%
in the compensation of employees reflected the increased hours and employment as economic
activities in Australia continued to recover.
X
Income
Interest rates Y
Impact of policy responses
As the global financial crises of COVID-19 has continued to drive the largest fiscal
response to the event in Modern Australian history. The policy interventions of recent policy
have shifted to target economic support from the states which have been affected by the
additional lock-downs induced by COPVID-19. The fiscal policies of government have
continued to target the healthcare spending and the other provisions of assistance for the
household, non-profit institutions and businesses (Welcome to the Australian Bureau of
Statistics, 2021). The government enhanced the spending on commonwealth social programs and
the supplementary funding related to COVID-19 crises for the areas of policy such as aged acre
support and disability as well to the other households for electricity bills. The policies provided
access to low cost loans in commonwealth RBA term funding facilities from the bank and for
state low interest loans for the local government and public universities.
IS 2
IS 1
LM
Y

X
Income
Interest rates
CONCLUSION
From the above discussion it can be concluded that COVID-19 is a global crises which
has not only impacted Australia but impacted all the countries all across globe. COVID-19
global crises have caused the situations of deaths, increased household consumption and the
unemployment rates. The impacts of COVID-19 on interest rates and gross disposable income
can been seen through the application of IS-LM model.
IS 2
IS 1
LM
Y

REFERENCES
Books and journals:
Covid, C.D.C., Team, R., COVID, C., Team, R., COVID, C., Team, R., Burrer, S.L., de Perio,
M.A., Hughes, M.M., Kuhar, D.T. and Luckhaupt, S.E., 2020. Characteristics of health
care personnel with COVID-19—United States, February 12–April 9, 2020. Morbidity
and Mortality Weekly Report, 69(15), p.477.
Lopez Bernal, J., Andrews, N., Gower, C., Gallagher, E., Simmons, R., Thelwall, S., Stowe, J.,
Tessier, E., Groves, N., Dabrera, G. and Myers, R., 2021. Effectiveness of Covid-19
vaccines against the B. 1.617. 2 (Delta) variant. N Engl J Med, pp.585-594.
Mo, P., Xing, Y., Xiao, Y.U., Deng, L., Zhao, Q., Wang, H., Xiong, Y., Cheng, Z., Gao, S.,
Liang, K. and Luo, M., 2020. Clinical characteristics of refractory COVID-19 pneumonia
in Wuhan, China. Clin. Infect. Dis.
Online references
Welcome to the Australian Bureau of Statistics. 2021. [Online]. Available through
<https://www.abs.gov.au/>. [Accessed on 25 October 2021]