12/4/2023 0 Comments Global economic meltdown 2008![]() ![]() The US sub-prime crisis of 2007 degenerated into the GFC: financial conditions deteriorated quickly, financial and real asset prices collapsed, and business and consumer confidence fell sharply. In the second half of 2008, the world economy experienced a severe financial and economic shock. A more detailed analysis of the evolution of the economy during this period including, where possible, a quantitative assessment of the impact of the various factors described in this article, is provided in Part 2 of this paper (Morling and McDonald, 2011). It then discusses a range of explanations that have been put forward for the Australian economy's resilience during this period. ![]() It begins with a brief recap of the GFC and the subsequent global downturn, including a look at some of the key channels through which the shock was transmitted to the Australian economy. This article looks at each of these different factors and makes an assessment of the role that each may have played. These include the strength and stability of the Australian financial system, the fiscal and monetary policy response, the flexibility of the exchange rate and the performance of our major trading partners, particularly China. Financial conditions were stressed, but the financial system held up remarkably well the economy slowed, but did not fall into recession and while unemployment rose, it did so by far less than in many other advanced economies.Ī range of factors have been put forward to explain the relatively strong performance of the Australian economy over this period. The Australian economy performed better during this period than other advanced economies on nearly all relevant indicators. The Global Financial Crisis (GFC) was followed by the deepest recession in the world economy since World War II. ![]() This article documents the financial and economic developments during that episode and examines a range of factors that have been put forward for the relatively strong performance of the Australian economy. The Australian economy slowed, but did not fall into recession, performing better during this period than most other advanced economies on nearly all relevant indicators. The Global Financial Crisis was followed by the deepest recession in the world economy since World War II. ![]()
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