The Impact of the Global Financial Crisis on the Australian Economy

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Mid September 2008 saw a significant change for the Australian economy, with the collapse of the Lehman Brothers triggering the Global Financial Crisis. The Global Financial Crisis was characterised by a tightening in the availability of money from overseas markets and resulting in governments having to intervene to maintain market stability. The Australian economy and its leaders generated considerable discussion about the prospect of a global recession, while most expected the financial crisis would have a major impact on the Australian economy, a factor that was not considered was the immediacy of its effects. The December quarter of 2008, saw business stocks devalue by $3.4 billion, the largest fall on record. In addition, there was a considerable softening in property prices, resulting in many companies/people having too much debt vs. too little wealth. With this, consumer confidence plummeted which in turn deteriorated consumption. Throughout the month of September and into October, the financial crisis spread from the United States to Europe, and all around the global economy, with economies contracting in growth.

In response to the most challenging global economic conditions since the Great Depression, the 2009-2010 Budget and the Economic Stimulus Plan focused on nation building and was crafted to boost employment, create a solid foundation for future growth and place the Australian economy to capitalise on the global recovery.

Key Initiatives

Stimulus now and investment for the future

A balanced stance on fiscal policy was targeted by the Government in response to the global recession between short and long-term policies. These measures involved bonus payments to low and middle-income Australians to insta...

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Wayne Swan 2009, ‘Budget Speech 2009-10’, Australian Government. Retrieved May 20th, 2010, from -

Wayne Swan 2010, ‘Budget Speech 2010-11’ Australian Government. Retrieved May 20th, 2010, from -

Westpac Institutional Bank May 2010, ‘Westpac Market Insights Australia, New Zealand, G3 & China’. Retrieved June 6th, 2010 from -

In this essay, the author

  • Explains that australia's unemployment rate fell to its lowest level in 34 years of 3.9% in 2008. however, as a direct result of the global recession, it soared to 5.8% in 2008-2009.
  • Explains australia's most significant macroeconomic achievements of recent years is the sustained decline in inflation rates from the early 1990s.
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