Intro

After being declared a pandemic on the 11 th of March 2020, the SARS-CoV-2 virus spread rapidly
from China throughout the world, infecting multiple and killing some, and resulting in further
economic, health and social downfalls. In May 2020, 72% of firms saw a decrease in revenue,
870,000 people have lost their jobs because of the recession and the number of job openings is
down 43% from February. Several institutions were closed in fear of infection and health and safety
measures were implemented immediately. A notable impact occurred on the Australian economy
because of COVID-19 due to fear, closure of locations and worldwide lockdowns, which this report
will outline.

Ramifications of the Pandemic

Due to the pandemic and ensuing lockdowns, some employees were dismissed, resulting in the
unemployment rate sharply rising, affecting labour markets. The underemployment rate reached an
all-time high of 13.8 percent, with 1.8 million people working reduced/no hours. Underemployment
among young people (15-24 years old) is at 23.6%. Consumers are reluctant to make purchases
because of fears of viral transmission via contact and businesses are suffering also because of
restrictions, lay-offs of employees and an overall decrease in revenue, attributing to COVID-19, and
were particularly hurt if they were direct contact businesses such as beauty salons. Retail sales also
suffered; economists estimate that sales have collapsed by 3.3%. Moreover, staggering amounts of
enterprises were extremely reluctant to invest because of economic uncertainty, about 59% in
August 2020. Since business investments are an integral contributor to GDP, some companies such
as Sydney Airport were immensely impacted. The federal government and Australia's export sector
both substantially contribute to the country’s economic output. The number of exports are
declining, especially of iron, coal and gas shipments and wages for public employees and public
infrastructure will account for most government expenditure in the June quarter. Economists predict
an economy growth of 0.5% in June but the number may be negative, given the negative
contribution from the export sector. Estimates for the September quarter vary from a 4%
contraction to a 5% contraction. A technical recession is entirely feasible, AMP Capital estimates a
40% chance. The Institute for International Trade (IIT) described the pandemic's economic impact,
claiming that actions implemented to restrict flows of people and products to control the spread
resulted in "four independent but connected economic shocks;” the supply shock, since factories in
impacted nations were forced to close and most modes of international transportation were
severely curtailed; the demand shock induced by government-imposed social distancing and other
policies resulted in a historic reduction in economic activity in hospitality, tourism, elective medicine,
personal care services and public entertainment, the financial shock prompted financial markets to
become extremely volatile as cash flows from businesses were constricted and the high level of
uncertainty caused share prices of companies most exposed to the two shocks to plummet and
employees being laid off, which alleviated some of the issues of COVID-19 and the economy.

Government Intervention

In response to the pandemic and hardships amassing, the government implemented some plans to
ease problems, contributing $291 billion in direct economic support since the pandemic beginning.
More Australians are now employed because of JobKeeper, with nearly 1 million jobs created or
restored since the crisis' peak and supporting over 3.8 million Australians. Reduced taxes supporting
household income and consumer spending, compensatory payments for employees and boosting
cash flow for businesses assisting over 800,000 employers were some other executed initiatives. The
unemployment rate dropped to 5.6% and Australia is on track to return to pre-pandemic levels in
less than two years, five times quicker than the 1990s recession. Australia cannot grow complacent,
demonstrated by Europe’s double-dip recession. The government is supporting the shift to private
sector-led growth to generate jobs and lower the unemployment rate, guaranteeing Australia's
economic recovery and managing lingering uncertainty. The government's response has maintained
health and safety whilst keeping businesses open, kept staff connected to occupations and
strengthening household balance sheets. Some businesses transferred their products online,
reducing further losses and obtain benefits. According to Mastercard’s research, small businesses
were among the hardest hit by the outbreak but roughly half accelerated to e-commerce. Businesses
and consumers reaped $53 billion in advantages from Google Australia's search, advertising and
entertainment platforms, according to a separate study commissioned by the company. The National
COVID-19 Coordination Commission was created to provide the Australian government with
coordinated advice on how to predict and reduce economic and social repercussions, ensuring the
Government obtains the most thorough advice to tackle ahead challenges and establish a recovery
path, involving collaborating across networks to unlock resources and solve problems so families,
businesses and communities can endure these adversities and to revive the economy from the
impact of COVID-19.

Summary

The impact of the pandemic on the Australian economy was less severe than initially anticipated,
according to Lowy Institute’s study. Nonetheless, the harm is significant and will have a long-term
impact. Compared to pre-COVID projections, the output loss may skyrocket to 6% of GDP. The
record-high 2019/20 budget deficit will be more than quadrupled for the current fiscal year because
of spending measures to support jobs, incomes and plummeting government revenues. Debt levels
have risen, however, with the implementation of vaccines and vaccine passports, life may eventually
return to normal, with the economy slowly repairing.