Economic growth
The impact of the Global Financial Crisis on economic growth
As a result of the global recession, Australia’s GDP was forecasted to contract by 0.5% in 2009-10 in comparison to other advanced economies which were expected to contract by 3.75% in the same year. However minor the reductions in GDP, it was evident that Australia was not exempt from the global recession although is better placed and is expected to perform better than almost all other OECD economies. The global recession has also triggered a fall in household wealth and a disruption in consumer confidence with consumption forecasted to contract by 0.25% in 2009-10.
Economic recovery package – use of macroeconomic policies
Fiscal policy
Fiscal policy, a macroeconomic policy, can influence resource allocation, redistribute income and reduce the fluctuations of the business cycle, influencing the overall level of economic activity. The policy utilizes the Commonwealth Government’s Budget to achieve the government’s economic objectives such as by altering the level of government expenditure and taxation manipulating the level of economic activity and hence influencing economic growth.
In response to the Global Financial Crisis, the Australian Labour Government had implemented a Budget deficit where total government expenditure exceeded total revenue, with expectations of $338.2 billion in expenses and $291 billion in revenue for 2009-10. The Australian Government’s revenue and expenses for 2009-10 can be seen below in Figure 1.1.
Figure 1.1 Australian Government taxation and spending
Source: http://www.budget.gov.au/2009-10/content/overview/download/Budget_Overview.pdf
From figure 1.1, it is apparent that since the February 200...
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Works Cited
Dixon, T 2009, Australia in the economy, Pearson Australia, Melbourne.
http://www.budget.gov.au/2010-11/content/overview/download/Budget_Overview.pdf
http://www.budget.gov.au/2009-10/content/overview/download/Budget_Overview.pdf
http://www.budget.gov.au/2010-11/content/speech/download/speech.pdf
http://www.westpac.com.au/docs/pdf/aw/economics-research/2010BudgetReport.pdf
http://www.anz.com/resources/e/1/e1fdfb804e8f8b3a8e97ce6073e41bfe/Forecasts-20102105.pdf.pdf?CACHEID=af9ea3804e8f896cbe1dffe6f59f1df3
http://www.leadingedge.com.au/news/statistics.php
http://www.treasurer.gov.au/DisplayDocs.aspx?doc=australian_economy/2009/attachments/001/strength_and_resilience_transcript.htm&PageID=013&min=wms
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http://www.alp.org.au/
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