BMA702 Comparative Business Contexts

In 2018-19, the Tasmanian economy has witnessed a strong performance, growing by 3.6%. This was the region’s strongest performance since 2003-2004. Tasmania’s performance was driven by a growth trend in dwelling investment and household consumption. Moreover, a strong growth in the tourism industry led robust business investment which also contributed towards the growth of the economy. The Tasmanian economy continued to enjoy benefits from these factors even in the first half of 2019-20. However, the outbreak of the Covid-19 pandemic in 2020 had a negative impact on the economy. To be fair, every major economy was impacted due to the pandemic and Tasmania was not spared either. Even though Tasmania was somewhat successful in curbing the spread of the virus, the pandemic’s effect on the economy has been severe. Notably, most key indicators witnessed declines during the period, with gross state product falling by 0.5%, compared to 3.6% growth in the previous year. Similarly, State Final Demand contracted by 0.1%, compared to the 4% in the 2018-19 period. This was most likely due to the implementation of public health restrictions and uncertainty about income security. This issue was further compounded due to the low investments in business as a result of a fall in demand.

What I find interesting about the economy of Tasmania is that despite the negative impact of the pandemic, the economy had managed to display a degree of resilience. Notably, the employment rate in Tasmania in 2018-19 was actually higher than the employment rate recorded in 2019-2020. Moreover, the monetary and fiscal policies of the Tasmanian government have also played a role in mitigating the economic and social impact of the Covid-19 pandemic. The economic and social support packages announced by the Tasmanian government are unmatched in the state’s history in terms breadth as well as funding level. It was also announced by the Tasmanian government that it would increase investments in infrastructure programs which is expect to generate jobs and boost the economy. However, Tasmania is also likely to face a few challenges as it starts rebuilding after the pandemic. Most notably, the recovery efforts are largely dependent on the evolution and direction of the pandemic. This is still an unknown factor and could have an adverse effect on Tasmanian recovery plans if the pandemic takes a turn for the worse. For example, if there is a resurgence in infections, it will lead to further lockdowns and restrictions thus putting a wrench in Tasmania’s recovery plans. Moreover, the lack of tourism, which was a major contributor to the economy, will also be a major challenge for Tasmania as it starts it recovery plans.

References

treasury.tas.gov.au. (2021). 2020-21 Budget Paper 1 - Chapter 2 - Tasmanian Economy 2020-21 Budget. Treasury.tas.gov.au. Retrieved 25 September 2021, from https://www.treasury.tas.gov.au/BudgetPapersHTML/Budget2020/BP1/2020-21-BP1-2-Tasmanian-Economy-2020-21-Budget.htm.

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