Essay on The Impact of the Global Financial Crisis on...

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†¦show more content†¦Conversely, total expenditure for 2009-10 is forecasted to exceed revenue, increasing by 2% on estimated expenses since the February 2009 UEFO at $338.2 billion. It is illustrated that the majority of revenue the government receives is from Individuals income taxation and on the other hand, expenditure is expended most in the Social security and welfare sector. In response to the advent of the global economic downturn in 2008, the Government utilised fiscal policy to provide an urgent stimulus to economic activity as well as a sustainable medium term boost to aggregate demand. The Labour Government had carried out an expansionary macroeconomic stance with a Budget recording $57.6 billion underlying fiscal deficit in 2009-10, which was equal to 4.9% of GDP (largest percentage of GDP on record for the last 40 years) and will remain a deficit until 2015-16. Further, the Government employed deliberate Government policy decisions subsequent to the crisis, adding to a major expansionary impact on the Australian economy. Early and decisive spending initiatives have been put in place against the face of the global recession, ensuring the economy is secured to make the most of the global recovery. Some of the key initiatives consist of: †¢ The Government has spent $12.2 billion to assist households financially and support economic growth. The household stimulus package provides extensive support from low to middle-income earnersShow MoreRelatedGlobal Economy : Global Economic Crisis1249 Words   |  5 PagesGlobal Economic Crisis Introduction Trade among countries has been an important accelerator of economic growth. It has created employment opportunities for many people in the world. However, due to this trade-like financial openness the economy is exposed to external shocks. In 2008, the U.S.-originated financial turmoil threatened the global capitalist system. All countries in the world were affected. 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