Question

Background:

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(The final assessment is applied in nature and encourages you to use the tools developed in the course content to analyse and make sense of the world around you. In 2020 economies around the world have experienced unprecedented shocks to their internal and external balance situations driven by necessary closures and shutdowns of economic activity to deal with the Covid 19 health crisis. Recovery from deep Global crisis can be uneven and some economies are better positioned to recover than others. Your final assessment task for IME is to apply the theory developed in the course to the current world events from the Australian Perspective)

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Dual-Question (cannot be answered separately):

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Choice of exchange rate regime – has Australia's exchange rate mechanism helped or hindered recovery (250 words):

How well is Australia positioned to recover in 2021 - likely factors that will drive growth (250 words):

Answer 1

For those that seek to grasp the outlook for Australia amid the continued COVID-19 crisis, the size and uncertainty of the macroeconomic indicators bring dramatic reading. In August 2020, the Federal Reserve Bank of Australia (RBA) forecast its figures for the quarter ending in December 2020: an percentage of about 10 percent, GDP contraction of around 6 percent, decline in household consumption of roughly 7 percent, and a 17 percent decline in business investment. and therefore the RBA acknowledged extensive uncertainty on all four indicators.
The shape and size of this shock are expected to vary drastically because it evolves. Australia started its COVID-19 experience in March with a nationwide lockdown and a big investment in cash-stimulus measures. States were expected to possess relaxed restrictions by July while economic-stimulus measures would support the transition to a new normal by September. However, a breakout of cases in Victoria has provided a harsh reminder that progress toward reopening is fragile and may not be linear. While states are balancing the established plans with new requirements, according to current plans, the cash stimulus are getting to be withdrawn across three phases from September 2020 to March 2021—though due to welfare pay cycles, payments will hit accounts a month later. Every phase of stimulus withdrawal are getting to a transition point for the economy, changing the distribution of the economic shock.