Q.

4
How are current market conditions for your chosen foreign currency similar or different
from the GFC, in terms of the response of stock markets and financial
institutions?Discuss your answer fully and provide evidence of credible research using
your technical skills from the unit. 1000

216 Countries and Territories around the world now have confirmed a total of 51,598,221 cases
of coronavirus.The coronavirus outbreak, which has put the global economy under a lockdown,
is being compared to the Global financial crisis (GFC) 2008. It has revived memories of the
2008-09 crisis-Bank failures,bloodbath on global stock markets,governments & central banks
suffering. Some major Australian economic similarities and differences between coronavirus
crisis and Global financial crisis as of end-October 2020 are summarized here.

The global financial crisis 2008 started from the United States, spread all over the world and
adversely affected real and financial sectors of developed as well as developing countries.This
crisis is the largest crisis of the world after the 1960s recession, likewise The Coronavirus
recession is a major ongoing global economic crisis which has caused both a recession in
economy & health of people worldwide. Some even say coronavirus is the worst economic crisis
after the 1960s recession.

Major economic similarities

● Manufacturing is a significant percentage of Australia’s GDP and employs almost

a third of the workforce.Australia has a long & proud history of manufacturing
throughout the 20th century. In 1960 manufacturing accounted for 28%of
Australia’s economy (GDP) & 28% of employment. The Australian manufacturing
sectors were impacted badly by the Global Financial Crisis (GFC)2008. And by the
1970s the economy as well as manufacturing was in decline. Then after as many as
29 years, Australia entered into such an economic recession again, all because of the
coronavirus outbreak.There was a complete lack of support from federal and state
governments and industry at all levels because of the coronavirus pandemic
which impacted on Australian manufacturing in the same ways Global Financial
Crisis (GFC)2008 did.
● The unemployment rate rose sharply in Australia during the GFC 2008,similarly in
2020 due to the coronavirus crisis around 500,000 people under 35 lost their jobs
from March to September and the rate of unemployment is 6.9%.
● Despite the Australian financial system experiencing a large economic downturn or
global crisis, the Reserve Bank of Australia launched many policies in order to help
the economy rise above from the downturn of the GFC 2008.The major step taken
by the reserve Bank of Australia was lowering the cash rate in 2008. Similarly, in the
wake of covid-19 pandemic, Australia’s central bank has cut its benchmark interest
 rate by 0.15 of a percentage point to a record low 0.10% in a bid to lift the economy
from a pandemic-induced recession.
●

Major economic differences

● According to the data, During the Global Financial Crisis (GFC)2008, the
proportion of Australian males with a job fell only a little, from 69.8% to a
low of 67.8%. By the start of 2011, it stood at 69.4%.Outcomes for females
were better. In September 2008 55.8% of females had a job. That
proportion never fell below 55.2% during the global financial crisis.But
there were still consequences.On the other hand, a research by The Australia
Institute found that between March and April, the number of women employed
fell 5.3 per cent compared to 3.9 per cent for men. The research showed women
are not only losing their jobs at a faster rate than men, they are being helped less
by the government emergency stimulus.
● Australia did not experience a large economic downturn or a financial crisis
during the Global Financial Crisis (GFC)2008. However, the speed of economic
growth was very slow. But the COVID-19 recession is a major ongoing global
economic crisis and Australia is no exception.It is currently the worst
global economic crisis since the second world war. According to the data,
Australia was the only major economy to avoid a recession during the 2008
global financial crisis - mainly due to its manufacturing sector & China’s
robust demand for energy and minerals.
● Because of the Global Financial Crisis (GFC)2008, Credit card debt also peaked in
2011, but has been on a general decline since, while interest rates on savings
accounts have also failed to return to pre-GFC levels. In contrast, Since the
onset of COVID-19 in March 2020, credit card debt is down a massive 20.22%
from more than $28 billion, and over the year, from July 2019, is down more than
26% (from more than $30 billion),according to the saving au.
● During the Global Financial Crisis (GFC)2008, The Australian economy slowed, but did
not fall into recession whereas during the coronavirus crisis the economy was facing its
deepest recession for the first time in many years. Financial conditions were stressed,
the economy slowed down but the financial institutions held up and now helping
the australian economy get back on its pre- Pandemic level in several ways.