EVENT: The COVID pandemic which hit in 2020 - 2022

(i) The nature of the event (2 marks)

- The COVID pandemic originated as a health crisis however the pandemic
affected economies worldwide through global interconnectedness, trade and
urbanisation. It led to widespread economic contraction due to lockdowns,
reduced consumer spending, disruptions in supply chains, and widespread
business closures.

(ii) Causes (2 marks)

- According to the Australian Bureau of Statistics, travel restrictions, lockdowns,
and concerns about the virus's spread led to a sharp decline in tourism and
travel-related activities. Flights were cancelled, borders were closed, and
international travel became severely restricted. Airlines, hotels, cruise lines, and
other travel-related businesses faced massive losses as demand plummeted.
The industry's recovery has been gradual and contingent on vaccination efforts
and changing public health conditions. According to 9 News, the nation's tourism
industry took a toll of $10 billion every month. “The coronavirus fallout has also
seen as many as 532,000 jobs and up to $21.3 billion in wages and salaries lost
this year across the country.”
- Moreover, reduced consumer spending played a large role in the economic
hardships. Fear of infection, job losses, and economic uncertainty led to
decreased consumer confidence and spending, impacting retail, Reserve Bank of
Australia states, entertainment, and leisure sectors. The “Reduced spending on
transport services, eating out, health services and gambling accounted for
two-thirds of the total decline in consumption in the lockdowns.”
 Figure 1 Trends in Household Consumption

(iii) Describe the extent of your chosen event and the causes of this event.

- The economic hardships inflicted by the COVID-19 pandemic reverberated on a

global scale, resulting in multifaceted challenges, that deeply impacted the
Australian economy to a large extent. Early 2020 marked the pandemic-induced
economy to a recession that resulted in severe contractions in economic activity;
large-scale unemployment, liquidation of businesses and disruptions in
manufacturing chains. Countless fields of work including travel, hospitality, retail
and telecommunication industries. This spurred unprecedented declines in
demand and revenue for these particular industries. These unexpected
circumstances combined with a lack of consumer confidence reduced consumer
spending, reduced business investments and widespread financial distress.
According to the Australian Bureau of Statistics, “...the level of GDP is estimated
to have suffered a cumulative loss of $158 billion compared to its pre-pandemic
trajectory.” Moreover, they have communicated that in household consumption
there decline. It is estimated that ⅕ people (12.7 million people) lost their jobs or
had decreased working hours. In an article by Small Business Australia small
and medium-sized enterprises reported a 78% decline in revenue, the highest
recorded. Due to the increase in leakage, the level of economic activity
decreased, underscoring the vulnerabilities of interconnected global economies.
Demonstrably, the economic distress during the COVID-19 pandemic had serious
repercussions.
 (iv) Impacts
On the Australian Economy
- COVID-19 had dire consequences on the Australian economy, forcing
government intervention and affecting GDP. Firstly, the government introduced
fiscal measures like packages including wage subsidies and cash payments to
support households, and support for specific industries heavily impacted by
lockdowns and reduce consumer spending. Additionally, the Reserve Bank of
Australia lowered their interest rates to a record low to allow money to be injected
into the economy.
- Consumers and businesses
Besides negatively affecting economies worldwide, COVID-19 took a toll on
consumers and businesses. Consumers faced income disruption, job losses,
reduced working hours and income cuts. This income insecurity increased
uncertainty, and social isolation and resulted in mental health concerns like
anxiety and depression. Certain sectors like hospitality, travel and entertainment
struggled the most whilst other industries like technology and e-commerce saw
increased demand.

(v) Explain the extent of the impacts on different sectors of the economy, in
relation to your chosen event.
- The impacts of COVID-19 on various sectors of the economy have been
extensive and multifaceted, affecting households, firms, the financial sectors,
government. and international sectors to a severe extent. The aftermath of the
pandemic on households was profoundly affecting, households and causing
disruptions in employment and income sources Large-scale unemployment and
lack of employment opportunities caused financial stress for many families
across Australia. A report from the Australian Bureau of Statistics states that
between June and July, more than one million people faced unemployment.
Research by ‘Home Joan Experts' concluded that household consumption was at
least 16% lower. The Reserve Bank of Australia states that the global supply
disruption: resulting from the pandemic caused high inflation rates, causing
households to rely on governments to supply grants. Beyond the economic
impact, the pandemic, also took a toll on individuals, as the economic uncertainty
job losses, and mental and social well-being isolation led to increased stress and
anxiety.
Similarly, the effects of the pandemic affected firms. Revenue declines were
observed across industries, due to reduced consumer spending, lower foot traffic
and supply chain disruptions. According to the Australian Bureau of Statistics,
66% of businesses reported a reduction in turnover, 64% reported a reduction in
demand and ⅔ businesses reported decreased revenue. Almost half of the
businesses have a fall in revenue, The most impacted businesses include
Education and Training, accommodation and food services, information media
and telecommunications.
Transitioning to financial sectors, with businesses and individuals. seeking
increased financial assistance, there was a notable increase in the demand for
loans and credit lines. Accenture reports, "The rapid move to digital payments
 has put additional pressure on banks, with three-quarters of surveyed bank
executives saying that the pandemic has increased the urgency of their plans to
modernise payment systems.” Additionally, banks have felt the strain as
experienced significant shifts, with fluctuation, in share prices and investment
values. The Reserve Bank of Australia, the Australian Securities Exchange 200
(pk) decreased in mid-2020. These circumstances directly impacted national
governments. On May 11, 2021, the Commonwealth government disclosed the
FY2022 budget. This involved A$48.4 billion for low-and-middle-income earners,
businesses and healthcare institutions.
Moreover, the government invested an additional $7 billion to strengthen the
national vaccination program. Other measures included assigning A$15 billion to
assist small banks. Finally, due to high unemployment rates, the Australian
government founded a $130 billion Job keeper Payment scheme to help
businesses affected by the pandemic. International trade and travel were also
drastically disrupted by the COVID-19 outbreak. The Australian Governmells
website states that the tourism industry was estimated as suffering revenue
losses of $10 billion per month over the initial six to eight months of the
pandemic." Likewise, global trade and industrial production faced countless
hardships, 2020 marked the year of some of the largest reductions since World
War 2. The number of international visitors arriving in Australia decreased by
99.3% in April 2020, perpetuating a significant loss in tourism-based revenue in
April 2020. In conclusion, the COVID-19 pandemic had wide-ranging impacts on
various sectors of the economy. The pandemic highlighted the
interconnectedness of these sectors and the severe extent to which these
sectors have struggled.

(vi) The main economic issues resulting from your chosen event
- The main economic issues resulting from COVID-19 include widespread
recession and economic contraction due to lockdowns, leading to job losses and
income disruption. Disrupted supply chains caused production delays and
shortages while declining consumer and business confidence reduced spending
and investment. Governments introduced stimulus packages, increasing public
debt, and financial markets experienced volatility. Additionally, small businesses
faced challenges and closures, and restrictions and reduced consumer
confidence severely impacted the travel and tourism sector.

(vii) Recommend strategies that can be implemented by individuals, and/or firms

and/or governments, in overcoming the economic impacts of your chosen event.
- As COVID-19 reshaped economies worldwide, individuals, firms, and
governments faced unexpected challenges. Here are a few short-term and
long-term strategies that can be implemented by the three sectors to pave the
way for recovery by overcoming the devastating economic impacts caused by the
pandemic.
Firstly, in terms of short-term goals, individuals can take immediate steps to
mitigate the economic impacts of the pandemic. Creating an emergency budget
that prioritizes essential expenses while minimizing non-essential spending can
provide a crucial financial safety net during times of uncertainty. By evaluating
their spending habits and reallocating funds to build savings, individuals can
prepare for unexpected challenges that may arise, such as job loss or reduced
income due to lockdowns and economic disruptions. For instance, someone can
opt to reduce discretionary spending like dining out or entertainment expenses
and instead channel those funds into an emergency savings fund. This fund can
act as a cushion in case of sudden financial setbacks, allowing individuals to
cover necessary bills and maintain financial stability. This short-term strategy
offers immediate financial stability and flexibility, empowering individuals to
navigate the initial shocks of the pandemic's economic repercussions.
Furthermore, in the long term, individuals can proactively build lasting economic
resilience by adopting specific strategies. Diversifying income sources by
engaging in part-time work, freelancing, or even starting a side business can
ensure a steady flow of funds even if one source is affected by economic
downturns. Additionally, investing in personal development through education
and skill enhancement is crucial for staying competitive in an evolving job market,
equipping individuals with the tools to adapt to changing circumstances and
secure stable employment. For instance, a graphic designer may choose to
supplement their freelance work with online tutorials that boost their skill set,
enabling them to offer a broader range of services and remain in demand even
during economic uncertainties. By undertaking these long-term strategies,
individuals create sustained financial security and personal growth prospects,
enhancing their ability to thrive in an ever-changing economic landscape.

Likewise, immediate actions are crucial for firms to navigate the economic
challenges posed by the pandemic. Swiftly implementing remote work
arrangements and leveraging technology to facilitate communication and
collaboration enables businesses to maintain operational continuity even during
lockdowns and disruptions. This approach ensures that employees can continue
to contribute their skills and expertise while adhering to safety guidelines and
restrictions, preventing work stoppages and maintaining essential business
functions. Consider a marketing agency that swiftly transitions its team to remote
work, utilizing video conferencing and project management tools to ensure the
seamless execution of campaigns and client communication. This adaptability
allows the agency to uphold productivity levels despite physical office closures.
By adopting these short-term strategies, businesses can guarantee operational
continuity, contributing to their resilience and capacity to navigate challenging
circumstances. To strengthen their resilience against future uncertainties,
businesses can also adopt long-term strategies that promote adaptability and
sustained growth. Investing in digital transformation and technology infrastructure
fosters agility, enabling firms to pivot their operations when faced with
disruptions. Furthermore, diversifying supply chains and exploring alternative
distribution channels can mitigate risks associated with single-source
dependencies and minimize the impact of supply chain disruptions caused by
global events. An e-commerce company that expands its range of suppliers and
adopts automated inventory management systems can ensure a steady supply of
products even if one supplier is affected by global disruptions. This proactive
approach reduces vulnerability to external shocks and safeguards the business's
ability to meet customer demand. These long-term strategies empower
businesses to navigate uncertainties effectively, positioning them to thrive in a
dynamic economic landscape and enhancing their capacity to sustain growth
over time.

In the short term, government intervention is essential to mitigate the immediate

economic impacts of the pandemic. Implementing fiscal measures such as direct
financial assistance to individuals and businesses, wage subsidies, and grants
can provide immediate relief and stabilize economic conditions. These measures
alleviate financial burdens on households and prevent widespread business
closures, safeguarding jobs and economic activity. Governments around the
world introduced stimulus packages that included cash payments to citizens,
small business grants, and wage subsidies. For instance, Australia's "JobKeeper"
program provided financial support to businesses to retain employees during the
pandemic-induced downturn. These short-term strategies alleviate economic
distress, preventing severe job losses and sustaining economic momentum
during periods of uncertainty. Governments can ensure long-term economic
resilience by adopting strategies that promote growth, innovation, and social
well-being. Investing in education and skill development programs equips the
workforce with the capabilities to adapt to changing job market demands,
enhancing employability and future economic productivity. Additionally, fostering
innovation through research and development incentives can drive technological
advancements and create new avenues for economic growth, positioning the
nation for sustained prosperity. Countries like Singapore have invested heavily in
education and training initiatives to develop a skilled and adaptable workforce.
Similarly, initiatives supporting research and innovation, such as tax incentives
for R&D expenditures, can drive technological breakthroughs and enhance
economic competitiveness. By pursuing these long-term strategies, governments
lay the foundation for sustainable economic growth and ensure that the
workforce remains capable of meeting the challenges of an ever-evolving
economic landscape.
In navigating the multifaceted challenges posed by the COVID-19 pandemic,
individuals, firms, and governments alike can practice resilience and adaptability
through a range of short-term and long-term strategies.