Introduction

Recent events such as the coronavirus outbreak highlight the far-reaching effects of an epidemic. Following the initial devastation of these events, the true cost of an epidemic takes time to filter through the economy. In this article, we're taking a look at the economic impacts that epidemics and pandemics have on a local, regional and global scale.

When did the coronavirus outbreak start?

The Chinese Government alerted the World Health Organisation (WHO) of several unusual pneumonia cases in Wuhan on 31 December 2019. In early January, the WHO announced that they had identified a new strain of coronavirus — 2019-nCoV. At the time of this article's publication, there are over 31,800,000 confirmed cases and over 974,000 deaths worldwide.

Introduction

Interest rates have never been lower, and it’s possible they might fall even further. This creates opportunities for householders and businesses, so how can you best take advantage of low interest rates?

1. Pay off your debt more quickly
By maintaining constant repayments as interest rates fall, you’ll reduce the time it takes to pay off your loan. That’s because interest will make up less of each repayment, with more going to reduce the outstanding capital. And the great thing is that to take advantage of this strategy you don’t need to do anything. Lenders usually maintain repayments after each drop in interest rates unless you instruct them otherwise.

Introduction

COVID-19 remained the big story of the last quarter. Tragically, by the end of September the pandemic had caused over one million deaths. While most of Australia managed to keep case numbers of coronavirus at very low levels, Victoria provided a case study in the severe human and economic impacts of having the virus escape control. Now it is epidemiologists, rather than economists, that we look to for advice on how to transition to a post-pandemic world.

Introduction

You might think that only importers and exporters pay attention to the value of the Aussie dollar, but movements in the exchange rate affect us all.

What are the main influences on exchange rates? Ultimately it comes down to supply and demand, and that can be determined by a number of things:

Introduction

GDP. If ever there were three letters designed to make us yawn, these would be solid contenders. So why are they so frequently on the lips of politicians, economists and finance journalists? More importantly, what does GDP mean for everyday Australians like you and me? Let’s get the boring bit out of the way first.

What is GDP?

GDP stands for Gross Domestic Product, which is the value of all of the goods and services produced by a particular country. This includes, amongst other things, private and public purchases, government spending, investment, plus the value of exports minus the value of imported goods and services.

Yep, boring.

Except that GDP provides a relatively simple way of conveying the overall strength of a country’s economy which directly affects our lives.

Introduction

That $50 note in your pocket. What’s it worth? “$50,” you say, probably thinking it’s a dumb question. But is it really? Or a sheet of plastic and a bit of ink that likely cost the note printer less than a cent? Your $50 note only has value because the government declares that it does.

This lack of intrinsic value means your $50 note, and the balances of bank accounts that represent most money in circulation, might better be described as currency rather than ‘real money’. For the majority of us most of the time this distinction is of no great importance, but there are times when it matters a great deal.

Introduction

Banks have not been passing on the full reduction in the Reserve Bank’s official cash rate, but no one knows with any certainty, what the future holds for rates and to what extent.

Most predictions are that they will remain at the low end for some time to come, so while borrowers love low rates and savers curse them, what can be done to make the most of the situation?