How Australia Survived the Recession & Global Financial Crisis?
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Australian Management of the GFC a Lesson in Effective Management?

A question that is asked around the globe, is how Australia managed so well to dodge the recession, not only a couple of years but 25 years of good fortune. Which other countries in the world can show an increased GDP during a global financial crisis, except for Australia?

Recession-Proof Australia

Australia showed continuous growth throughout the global recession with their DGP up by 3.3 per cent. Australia is also the country that avoided the global financial crises in 2008.

Free Trade Agreement Between China and Australia

The two-way trade between China and Australia has tremendous benefits to the manufacturing sectors and Australian households that rely on cheap imports.

Chinese and Australian Investment

The two giant countries are important investment partners and have collaborated in large joint ventures in the energy, resources and mining sectors. China is a huge foreign purchaser of debt in Australia including government securities. The amount that the Chinese invested in Australia in 2009 was $16.6 billion while Australia invested $6.3 billion in China in the same year.

Energy and Mining

China requires a lot of minerals and energy from Australia which has been expanding since 2009. 80 per cent of Australia minerals and energy was exported to China in 2009.

Australia- China Trade

During the global recession trade fell considerably between Australia and its trading partners. However, at the same time throughout the recession and global crises, the trade between China and Australia reached a record $78.1 billion which was a 15.6% trade increase.

Conclusion

Australia- China Trade

The strong economic performance Australia showed during the Global Financial Crises is attributed to their sound liquid banking system, the Government’s stimulus measures and the increased demand for minerals and energy that the Chinese imported from the Aussies.
Another huge factor is because Australia was one of the few countries that entered the global crises in excellent financial health. They were debt-free, running surplus budgets and growing strong with significant assets. Along with the favourable trade and the robust foundations of the country, Australia survived and excelled in very good shape.

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References

  1. https://treasury.gov.au/speech/australias-response-to-the-global-financial-crisis
  2. https://www.worldfinance.com/special-reports/recession-proof-australia
  3. https://www.abc.net.au/news/2018-09-15/10-years-since-australia-responded-to-the-gfc/10248784
  4. https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook43p/australiachinagfc
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