Chinese Economy
The COVID-19 pandemic has had a massive impact on the economies of various countries, including even large ones like China. Two elements significantly affect a country’s business cycle: manufacturing output and net exports. These two parameters show opposite results in their dynamics regarding the Chinese economy over the last three quarters of 2021.
Net exports during this period grew significantly, almost doubling from $135.5 million to $250.6 million, but changes in manufacturing production have noticeably decreased. By the last quarter, this value dropped to 3.1% compared to 31.4% at the beginning of the year. While both of these factors have historically been significant economic drivers for China, the decline in output growth has a more substantial impact on the country’s processes (Singhal & Singhal, 2019). Consequently, it contributed more to the slowdown in economic growth in China.
On the other hand, despite the decline in economic growth, the scale of unemployment in China during this period remained virtually unchanged. Over the past three quarters of 2021, it fluctuated within two-tenths of a percent. Although unemployment increased from the second quarter to the fourth, it remains below the level of early 2021 or the end of 2020.
Given the decline in production growth and the impact of COVID-19, it can be assumed that the most affected unemployment type is cyclical or demand-deficient and is associated with an economic recession (Unemployment). This is supported by studies documenting a significant reduction in labor demand (Liang, Rozelle, and Yi, 2022). However, such changes are minor and do not significantly affect the overall economic picture.
Simultaneously, the observed changes in inflation are much more meaningful. Over the past three quarters, consumer price inflation has changed twice, but by the end of 2021, it rose again to 1.5 percent. Such values are well within acceptable limits; however, they differ significantly from the parameters of a year ago. This may serve as a clue that inflation will continue to be unstable.
Most likely, such fluctuations are associated with the cost-push type of inflation, which is closely related to the increase in prices for raw materials (Williams, 2022). The COVID-19 pandemic has seriously disrupted global logistics, driving up the price of most resources. As a result, such a situation is reflected in the cost of production, which producers are trying to compensate for by increasing the prices of goods.
Australian Economy
Over the past three quarters of 2021, the Australian economy has shown a gradual, stable growth in RGDP. This is facilitated by the gradual decline in unemployment, which significantly impacts the economy, especially after the COVID-19 pandemic (Rodríguez-Caballero & Vera-Valdés, 2020). Secondly, exports have steadily increased over the past three quarters.
Finally, further growth and recovery can be promoted by adopting political strategies (Agarwal, 2022). This is confirmed by a study by König and Winkler (2021), who documented the positive economic impact of introducing non-pharmaceutical interventions in the fight against the pandemic. Thus, the gradual success and growth of the RGDP are due to a combination of external and internal economic and political factors.
The depreciation of the Australian dollar against the US dollar has several causes. The value of a currency is influenced primarily by the inflation rate, which, according to available data, was at a reasonably high level for the last two quarters of 2021 (Nasrudin, 2022). In addition, according to Atkin, Hartstein, and Jääskelä (2021), one of the main drivers of currency depreciation is the difference in Australian interest rates relative to other countries. Due to this, despite the positive net exports, the AUD is gradually depreciating.
Reference List
Agarwal, P. (2022) Economic growth. Web.
Atkin, T., Hartstein, I., and Jääskelä, J. (2021) Determinants of the australian dollar over recent years. Web.
König, M. and Winkler, A. (2021) ‘The impact of government responses to the COVID-19 pandemic on GDP growth: does strategy matter?’, PloS One, 16(11), e0259362.
Liang, X., Rozelle, S., and Yi, H. (2022) ‘The impact of COVID-19 on employment and income of vocational graduates in China: evidence from surveys in January and July 2020’, China Economic Review, 75, 101832.
Nasrudin, A. (2022) Currency depreciation: meaning, causes, impacts. Web.
Rodríguez-Caballero, C. V. and Vera-Valdés, J. E. (2020) ‘Long-lasting economic effects of pandemics: evidence on growth and unemployment’, Econometrics, 8(3), 37.
Singhal, K. and Singhal, J. (2019) ‘Technology and manufacturing in China before the industrial revolution and glimpses of the future’, Production and Operations Management, 28(3), pp.505-515.
Unemployment (2022). Web.
Williams, G. (2022) ‘3 types of inflation and how they differ’, Forbes, Web.
