Analysis the impacts of the 2008 global financial crisis (GFC) on Australia and how did australian government use macroeconomic policies to stabilise the economy.

HI5003 Economics for Business 2018
IMPACT OF GLOBAL FINANCIAL CRISIS
&
STEPS TAKEN BY AUSTRALIAN GOVERNMENT
Table of Contents
Introduction    3
Impact of Global Financial Crisis on Australia    3
Policies of Australian Government to stabilise the economy    6
Conclusion    7
References    9
Introduction
The Global Financial Crisis of 2008 is considered as one of the worst financial crisis after the Great Depression of the 1930s. It had a major impact on the liquidity and other aspects of the financial system of many countries. Australia being one of the major players in the world was also affected by the crisis. However, the impact on Australia was less severe than other countries like America and others. A number of organisation went bankrupt that disturbed the financial system of the global economy. Government of different countries took different steps to cope up with the crisis. It lead to widespread unemployment and panic across the globe. The stock market crashed heavily during the time. The impact of the event was clearly visible across the globe. This assignment analyses the impact of the Global Financial Crisis on Australia and the macro-economic measures that were taken by the government of Australia to deal with the issue.
Impact of Global Financial Crisis on Australia
Among the developed countries across the globe, Australia was among the list of countries that were less affected by the event. In the quarter ended March 2009, the Gross Domestic Product of Australia was around 0.4 percent. According to the views of Mucci et al. (2016), this was an indication of the fact that by that time, Australia has escaped the recession by a large extent. The banking sector as Australia was less affected as there were no sign of failures and profitability remained strong. Although the profits was, low in comparison to previous years but was satisfactory in comparison to other countries.
On the other hand, there few listed investment/financial companies failed that led to high loss for the investors. The stock market crashed heavily and by June 2009, it was valued at 41% of the value of November 2007. This was a setback for the investors, as they did not expect loss of this magnitude. All the countries in Europe and Asia has high government debt and high budget deficits. This made then vulnerable to the shock of the crisis.
As per the opinion of Harvie and Van (2016), on the other hand, Australia had low government debt and low budget deficits. This is one of the most prominent reason behind the power of the economy to absorb the shock. At the time of Global Financial Crisis, Australia was debt-free, growing strongly with high budgetary surplus. In addition to that, it had high exports that led to high value of Australian Dollar in the International Markets.
The exposure of the Australian Banks to the US housing market was low in comparison to other countries. It was because of the fact that domestic lending was profitable. This helped the banks of Australia to tackle the issue. The economy of Australia depended on huge export of resource to China. China was able to cope up from the impact of crisis rapidly. This helped the economy of Australia to revive as soon as the demand in China stabilised.
According to the perspective of Sassen (2016), the Australian Dollar also depreciated at a fast pace as the effect of the crisis increased. The value of Australian decreased by over 30% from its July 2008 peak. By March 2009, the value of Australia Dollar recovered largely thereby reflecting the strength of the economy of Australia. In the year 2009, a number of investment/finance firms collapsed that had investment in the international markets. However, the number in comparison to other developed countries was very less. In other countries like United States and others, the whole economy had been drastically affected.
According to the opinion of Benetrix et al. (2015), Global investment and advisory firm Babcock and Brown failed in March 2009. Companies like Great Southern and Timbercorp that accounted for more than 60% of the markets in agribusiness-managed investment schemes failed in May and April 2009 respectively. The companies that had low investment in housing and banking sector were affected by the crisis, but by a lower extent (RBA, 2009).
The risk exposure of Australian banks to high-risk securities was comparatively lower. As per the views of Panizza and Presbitero (2014), the Australian Government also announced guarantee arrangements in October 2008 for wholesale funding and bank deposits. Another market in Australia that was significantly affected by the Global Financial Crisis was the property/mortgage trust industry. The government announced bank guarantees due to which there was large-scale withdrawals from the property trust.
As the bank government, the reliance on such schemes, backed deposits heavily. The government had allocated ample amount ofmoney to deal with the situation. The Australian government has also set up a special purpose fund to fund the vehicles to ensure availability of finance for car dealer as GE withdraw large amount of money from the market. Significant impact was seen on the pension Fund sector. Under management of Compulsory superannuation, funds reached $1.2 trillion before the crisis.
After the crisis, the same figure...