Abstract
The COVID-19 Pandemic quickly spread in almost all countries worldwide as a frightening outbreak that worsened all countries’ economic, social, political, and social issues. Governments have been operating with uncertainties and difficulties, and over half of the world’s population has experienced lockdown. Pandemics have triggered the most severe economic crisis since the Second World War. Due to the severe economic problems brought on by the COVID-19 Pandemic, many countries would not recover their output levels in 2019 until 2022. The Pandemic has dramatically speeded up some pre-existing trends, specifically digitalization. The impact of the Pandemic in terms of diseases, death rates, and hospitalization on countries’ economic activities has been different across the economic regions and countries. Various governments at all levels have quickly responded by application of place-based strategies and policy responses and implementing various reactions to the COVID-19 crisis. Countries have applied different territorial approaches, such as lockdowns and wearing masks. Many governments announced massive recovery strategies on public investments and prioritized digitalization, more robust health systems, and a shift to a carbon-neutral economy. Australia is one country that strictly applies safety measures, such as restricting free movement across the globe. Until 2021, the country forbade its citizens from traveling outside the country unless they followed strict and limited criteria. Brazilian local governments have taken different response measures to solve health issues and address the Pandemic’s economic effects. Brazil applied for economic support measures focused on supporting the financial institution’s liquidity, a capital relief scheme to help Brazilian financial institution sustain their credit flow, and giving additional loans to support real estate purchases.
Introduction
The COVID-19 Pandemic is mainly a public health issue affecting the financial system and the economy. The Pandemic has made governments across the globe operate in a context of difficulties and uncertainties. Schools and universities were closed in 2020 as the Pandemic developed into a world threat within three months of the year. By the end of 2020, COVID-19 had spread to almost all countries, and the Pandemic impacted more than 50 million people globally. Countries responded by enacting containment measures (Borre et al., 2022). All economic sectors were affected by global supply chains, reduced international tourism, reduced business travel, and weakened demand for imported products and services. Such measures to respond to the Pandemic have hardly affected businesses and levels of unemployment while increasing the dependency ratios in various countries.
The economic recession COVID-19 brought was worse than the impacts of the 2008 global economic recession. COVID-19 is a unique pandemic as it caused both demand-side and supply-side shocks and affected all sectors of the world. Until 2022, the government has managed the economic recovery while preventing the second wave of the Virus from posing more significant impacts (Groch, 2022). The Pandemic has caused Australia’s economy to achieve historical growth patterns. Brazil is among the globe’s countries that responded to the Pandemic’s impacts by protecting the functioning of financial institutions and credit markets. The Brazilian Central Bank implemented strategies for increasing liquidity and easing capital requirements. The government applied large income transfer programs to various credit programs targeting small and medium-sized businesses. As a result, the Brazilian economy recovered strongly in the middle of 2020. Although Brazil is one of the countries with the most robust healthcare system, its capacity is highly uneven. The response to the Pandemic applied in countries has led to significant disruptions to global economic activities. The research question this paper seeks to address is: How did the Australian and Brazilian government response to the outbreak of Covid 19 affect their country’s economy till the start of 2022?
Like many countries around the globe, Brazil and Australia were severely affected by the Covid 19 pandemic both economically and socially. Some countries have better pandemic management than others. Australia was one of the first countries to implement strict measures to curb COVID-19, including border closures and social distancing regulations. In contrast, Brazil’s government response could have been more effective, with delays in implementing lockdowns and insufficient testing and tracing measures. As a result, Brazil experienced a severe outbreak, which led to a higher death toll and a more significant economic impact. Brazil’s GDP fell by 4.1% in 2020, and the unemployment rate reached 14. Brazil’s pandemic management had been ranked the world’s worst, with New Zealand at the top of the class. If Brazil had applied stricter COVID-19 containment measures, including social distancing, it would have saved many people and reduced the high death rates. If Brazil had launched vaccination and social distancing programs without delays, it would have prevented 80 percent of the registered deaths. Brazil’s vaccination program started in January 2020. However, it has been disturbed by imported dose shortages (Milhorance, 2022). The president refused the vaccination, making it hard for local authorities to convince people to be vaccinated. Nations with smaller and spread-out populations, like Australia, were able to develop better resources and systems for containing the Virus. As such, COVID-19 took the Virus more seriously than Brazil. While presidents of Brazil and the USA railed against mask rules, Australia’s federal governments and states responded to scientists and followed the containment measures (Groch, 2022).
This paper will demonstrate how the government’s response to an unprecedented pandemic can impact its economy. Policymakers will be well informed on the central issues, such as the leading roles of political actors in various countries and the need for international cooperation in crisis management. The COVID-19 outbreak confronted policymakers with a huge problem resulting in a context of the highest uncertainty. No one knew when the Pandemic would stop. Policy responses have been established and applied with experimentation, resulting in unintended effects. Various institutional factors and policy dynamics have affected the scope of COVID-19 responses (Maggetti et al., 2021).
Literature Review
To start with, a paper published on Risk Analysis by An International Journal tries to weigh the challenges of managing public health risk in Brazil. The authors aim to identify the significant risk factors and vulnerabilities in the country’s public health system and to provide recommendations for improving risk management. The authors emphasize the need for a comprehensive risk management approach involving multiple stakeholders and responsive to the population’s changing needs (Wang et al., 2021). Another article published in the health affairs paper explores the impact of the Family Health Strategy (FHS), Brazil’s fundamental healthcare policy, on health outcomes and healthcare costs. The study aims to determine the effectiveness of the FHS in reducing hospitalizations and emergency department visits, as well as its cost-saving potential. The authors hypothesize that the FHS positively impacts health outcomes and lowers healthcare costs, particularly for low-income individuals (Knaul et al., 2022). In addition, an article published in the Brazilian Journal of Epidemiology examines the social and economic determinants of health in Brazil. The study aims to identify the factors contributing to health inequalities in the country and provide recommendations for addressing these inequalities. The authors emphasize the importance of addressing social and economic determinants, such as income inequality, access to education and healthcare, and social exclusion, to improve health outcomes and reduce health inequalities (Borre et al., 2022).
The paper “Economic Impacts of SARS/MERS/COVID-19 in Asian Countries” examined the financial effects of the SARS, MERS, and COVID-19 epidemics in several Asian nations, including Australia. It was published in the Asian Economic Policy Review in 2021 (Tanaka, 2021). The study finds that these pandemics have caused significant economic damage, negatively affecting supply and demand. In particular, the COVID-19 Pandemic has had a more severe and widespread impact than previous outbreaks, affecting the health sector and other sectors of the economy, such as tourism, hospitality, and retail. The article identifies various measures that Asian governments have taken to mitigate the economic impact of the Pandemic, including fiscal and monetary policies, targeted support for affected industries, and social safety nets. However, the author notes that these measures have not been able to completely offset the economic losses incurred by the Pandemic (Tanaka, 2021). Overall, the article provides valuable insights into the economic impacts of pandemics in Asian countries and the policy responses to mitigate these impacts. It underscores the need for continued efforts to build a more resilient and equitable economy in the face of future health crises (Tanaka, 2021). Also, another article by Zarghami (2021) also considers how the COVID-19 epidemic has affected Australian companies, focusing on identifying the vulnerabilities exposed during this crisis. The author argues that understanding these vulnerabilities can help businesses to better prepare for future disruptions and build resilience. The article proposes a taxonomy of vulnerabilities that includes financial, operational, structural, regulatory, and socio-cultural factors. The author also suggests that government policies can play a crucial role in mitigating these vulnerabilities and supporting businesses during times of crisis. The study emphasizes the need for businesses to be agile and adaptable in unexpected disruptions such as pandemics.
The article by Scott et al. (2022) discusses the worsening effects of COVID-19 on Brazil’s existing economic, political, social, and health issues. Their results show the Pandemic’s effects ranging from the deaths of many people to social precariousness and unemployment. The authors argue that the battleground against the Pandemic has caused political tensions, social despair, and tension in the health system. Large numbers of confirmed deaths were reported to the World Health Organization, yet these were substantially underestimated. The authors note the necessity of considering social class, ethnicity, and gender, which makes people vulnerable to the pandemic effects. Various groups facing workplace disparities, such as women, had their conditions worsened due to work shortages and unemployment rates. The gender equality implications are enormous and are anticipated to continue beyond the time of the Pandemic. The resumption of work was at different paces in areas other than schools and daycare centers, which forced many women to stay home and care for their children. Social distancing and business closures caused a sharp decline in employment (Scott et al., 2022). The author’s findings were consistent with the present literature indicating the negative impacts of the COVID-19 Pandemic on the already vulnerable economy of Brazil. The sum of economic and political effects in Brazil caused various social inequalities and health system shocks. Overcrowding in healthcare facilities and unemployment aggravated socioeconomic factors that led to the spread of the COVID-19 Pandemic (Scott et al., 2022). These factors are more pertinent to my research as they help understand the factors that worsened the Virus and how the response to it impacted the country’s economy.
The Australian Bureau of Statistics article considers the economical components most affected by the COVID-19 Pandemic. It further explains the cumulative losses or gains compared with past pandemics. The effects of the Pandemic were worse than those of the 2008 Great Depression. When the Australian government took containment measures, the country’s GDP fell. The GDP was restored when the country moved from lockdowns, although it is yet to reach the pre-pandemic rates. According to the Australian Bureau of Statistics, the cumulative GDP fall resulted from household consumption. Lockdowns led to reduced expenditure on restaurants and travel services as they were inaccessible. Fernanda Nechio and Bruno Serra Fernandes state that measures to restrict mobility in sectors impacted the Brazilian economy’s consumer demand and supply of goods. (Nechio & Fernandes, 2021). Consumers were instructed to stay home, so their expenditure shifted to essential commodities such as food. Due to the weakening demand for products and services, businesses were not performing well (Australian Bureau of Statistics, 2023). As such new private investments declined. The government shifted its consumption to COVID-19 containment measures.
Fernanda Nechio and Bruno Serra Fernandes discuss Brazil’s road to recovery. The authors emphasize that the Brazilian economic recovery strategy was effective as the economy recovered quickly towards the end of 2020 and hence should continue with this path. Fiscal and monetary measures were implemented in Brazil to respond to the sizeable economic share, which had almost crumbled in the second quarter of 2020. These policy responses targeted the provision of lifelines that would help firms and households overcome the challenges of lockdowns. Monetary and fiscal authorities quickly restored workers’ income, protected credit market functions, and preserved employment (Nechio & Fernandes, 2021). Although the recovery of the 2020 second half was robust, it was uneven. The authors emphasize the need for countries to face the challenges brought by the deterioration of fiscal response due to the Pandemic. Sustenance of recovery requires reduced uncertainty about debt sustainability.
The article by Borre et al. (2022) discussed the impact COVID-19 had on the healthcare systems and socioeconomic aspects. The Pandemic worsened the pre-existing weaknesses in public health, political and financial systems. There is an increased disparity in ICU bed access amidst the rising number of patients needing ICU support. This showed that the Brazilian health system was overwhelmed. COVID-19 worsened the impoverished population pre-COVID-19 Pandemic while pushing some lower and middle socioeconomic classes into the poorest class. Even as some classes were recovering post-pandemic, some poor have gotten poorer, especially those in the racial minority.
Given that racial minorities were likely to be unemployed and become homeless, the Pandemic affected the population more. Resources were dedicated to COVID-19, which has substantially impacted Brazil’s testing capacity for other infections, such as Zika and dengue. Digital health which was not new in the country, became mainstream. Emphasis on telemedicine is assumed to have negatively impacted other disease management. COVID-19 hit the country while at the same time managing these infections whose symptoms are similar to those of COVID-19. Cancer screening fell substantially during pre-pandemic, and cancer-related hospitalizations and surgery fell as many diabetic patients postponed regular checkups and treatments. As such, a lack of testing capacity might imply underreporting of this infection hence poor management, which might have a long-term impact on their epidemiological curve in the future (Borre et al., 2022). The authors suggest that the country needs a robust testing capacity even in low-resource contexts.
According to Milhorance (2022), the mortality rates in Brazil were higher than in other parts of the world. Vaccination and social distancing measures enactment was delayed. Apart from the shortage of COVID-19 vaccine supply, Jair Bolsonaro discouraged the vaccination campaign, refused the vaccination, and spread false information about the vaccines. This has meant the local authorities struggle with engaging people to get vaccinated (Milhorance, 2022).
As demonstrated, most scholars have researched the vulnerability of the public health system, the rising case of Covid 19 and the impacts of Covid 19 on the healthcare system and economy, and economic recovery both in Brazil and Australia. However, no research has focused on how Australia and Brazil’s government response to the outbreak of Covid 19 affected their country’s economies until the start of 2022. Against this background, this research assesses this gap by stating the role of these governments in COVID-19 and its impacts on the economy. The government is given the mandate to protect the health of its citizens. The government makes policies and decides who to get, what, when, and why. Therefore, an accurate picture of the economic turmoil or vice versa in a given country following the Covid 19 pandemic can only be established by researching their respective government’s role in mitigating the spread of the disease and protecting their economy.
Summary of the Hypotheses and Main Ideas
Wang et al. (2021) hypothesized that the government’s response measures and epidemic trends of COVID-19 vary across different countries. They analyzed 80 countries, including Australia and Brazil, and found that the government’s response measures were positively associated with controlling the epidemic. Knaul et al. (2022) emphasized the need for enhancing health systems to combat pandemics, examining Latin American subnational policy responses to COVID-19, including Brazil. They argued that decentralizing health policies could strengthen health systems and improve pandemic response. Borre et al. (2022) According to a theory, the COVID-19 Pandemic impacted the incidence and severity of other infectious diseases in Brazil, focusing on dengue infections. They found a significant decrease in dengue incidence during the first wave of COVID-19 in Brazil, but dengue cases increased significantly after the first wave. Zarghami (2021) conceptualized a taxonomy of vulnerabilities and reflected on the impact of COVID-19 on Australian businesses. She argued that businesses’ vulnerability varies depending on their size, industry, and location, among other factors (Zarghami, 2021). Tanaka (2021) analyzed the economic impacts of COVID-19 and compared them with the impacts of SARS and MERS in Asian countries. He argued that the COVID-19 Pandemic had caused more significant economic impacts than SARS and MERS, primarily due to its longer duration and more extensive spread.
Magetti et al. (2021) hypothesized that governments around the globe have been relying on virologists and epidemiologists to establish their non-pharmaceutical responses, such as lockdowns and staying at home. Political science also plays a vital role in the understanding of the economic, social, and political impacts of the Pandemic. The pandemic responses have had unprecedented consequences. Pandemic percolates on broader aspects important for democratic policy-making, like the mobilization and participation of citizens in policy-making and political trust development. Views related to the threat have increased mobilization in the initial pandemic phases. Voter’s views on the competence of the government in addressing the Pandemic were impacted by political ideology. Social media has been crucial in answering surveys that gave public views and behavior during the Pandemic (Magetti et al., 2021). The authors emphasize that democratic systems should balance policy reactions’ legitimacy and effectiveness.
O’Sullivan et al. (2020) hypothesized that Australia was quick in responding to the initial phases of the Pandemic, which made the country’s responses successful. Australia started screening flight passengers between Sydney and Wuhan as early as 23rd January, and the first recorded cases of COVID-19 were detected. The government responded through border security measures, including restricting foreign nationals from china. Anyone leaving the country for non-essential reasons was restricted from moving. School attendance was reduced as citizens were instructed to stay home (O’Sullivan et al., 2020). However, these measures impacted the country’s economic, political, and social life. Learning from home was not working correctly for learners. This resulted in social and economic disparities in school achievement. As such, learners with pre-existing learning challenges in Australia were disadvantaged. Strict distancing was necessary for schools in anticipation that indigenous Australians have a higher risk of coronavirus infection. Testing for COVID-19 in Australia suggested a strong correlation between the testing rate and the relatively reduced death rates and infection. This was proved by the zero records for new infection on 1st May in Queensland, Western and southern Australia. In May, Australian cases of infection were acquired from other countries (O’Sullivan et al., 2020). This implies that the internal prevention measures were effective.
Most of the working population worked more than usual due to the Pandemic, and there was increased anxiety about job security and personal safety. The economy had shed many jobs; hence the unemployment rate had been rising, and the depression among citizens increased as people were unable to socialize. Family violence has also risen, including parent-related conflicts in care and safety provision. This was evident in related disputes in the Family Court of Australia. Cases of alcohol consumption were also increasing. People from different cultures were affected differently by the COVID-19 Pandemic. Online studies were facilitated through internet access distribution to promote social equality (O’Sullivan et al., 2020). However, there was no universal access to these technologies.
Fernanda Nechio and Bruno Serra Fernandes hypothesized that the Brazilian economic recovery strategy was effective as the economy recovered quickly towards the end of 2020. The economic recovery involved fiscal and monetary policies. The global economy had been recovering though concentrated in a few sectors like the agricultural and industrial sectors. The recovery continued towards the end of the year but started falling due to the new waves of COVID-19 infections and the new restrictions on cross-border movements. 2020 ended with inflationary pressures as food item prices and those of various commodities rose. Brazil had to react to the increased liquidity demand for businesses and households. However, the lockdown measure affected the supply of goods and demand; as such, there were declines in economic output. Capital markets have become a vital credit channel in Brazil (Nechio & Fernandes, 2021). This was one of the initial market segments to be influenced by increased demand for liquidity.
Hypothesis: The study hypothesizes that an immediate and timely response to the spread of the covid 19 by the governments of Brazil and Australia would reduce the pandemics’ impacts on their country.
Summary of the Results
There is a consensus that the government’s response to the Pandemic was critical in mitigating the economic impact of the Pandemic. Wang et al. (2021) found that countries with timely and comprehensive responses had better epidemic control and a lower economic impact. Knaul et al. (2022) proposed a framework for subnational policy responses to pandemics and highlighted the need to strengthen health systems. Zarghami (2021) identified and classified the vulnerabilities of Australian businesses exposed by the Pandemic. Tanaka (2021) found that the economic impact of the Pandemic varied by country, with Asian countries being less affected than others. Tanaka (2021) urges that the COVID-19 outbreak in 2020 has had significant economic impacts on countries throughout Asia and the world. Tanaka argues that the initial impact of the outbreak was relatively small, with a decline in consumer spending and business investment primarily confined to China. However, the economic impacts became more severe as the outbreak spread to other countries, and governments implemented measures to contain it. Tanaka notes that the widespread shutdown of businesses and the decline in consumer spending resulted in a significant decrease in economic activity throughout Asia, particularly in the tourism and retail sectors. Nechio & Fernandes (2021) stated that although the Brazilian economy had been recovering from its recession after implementing monetary and financial policies at the end of 2020, the recovery started declining due to the lockdown measures due to new waves of COVID-19. Australian Bureau Statistics showed economic losses in the Australian economy coupled with a fall in GDP and household expenditure. O’Sullivan et al. (2020) found that although the government’s containment measures effectively curbed the spread of the Virus, there were social disparities in technology and education access and increased mental issues among the citizens. Magetti et al. (2021) found that voters’ views on the competence of the government in addressing the Pandemic were impacted by political ideology.
Conclusion
After considering all the information, the research examined here emphasizes the crucial part of government action in reducing the COVID-19 Pandemic’s economic effect. The general view is that prompt and thorough actions frequently lead to improved epidemic control and a less economic effect. However, the Pandemic’s effects on the economy differed by nation, with Asian nations being less impacted than other regions. The research provides frameworks and taxonomies to pinpoint weaknesses and improve healthcare systems to prepare for subsequent pandemics. Overall, the research discussed here offers insightful information on how the governments of Australia and Brazil responded to the epidemic and its effects on their respective economies. Both countries witness a fall in GDP, overall economic activity, and social disparities.
Reference
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