Guidelines Australia Should Adopt in Area of Foreign Economic Policy

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Moreover, this paper intends to assess the economic impact of the Australian international trade-related strategies along with its budgetary implications. Additionally, it measures the response of the Australian community towards governmental reactions in order to resolve the problem.The recent GFC of 2007-2008, primarily began with the ‘credit crunch’ due to the failure of confidence by US investors in the value of ‘sub-prime mortgage’ which in turn led to a liquidity crisis in the international market. Subsequently, the international stock markets became highly unstable as this global economic crisis was observed to harm the financial institutions globally due to the bank solvency, decline in credit availability and lowering investor confidence level. This in turn influenced the securities in the worldwide economy as the credit rate increased and international trade declined. The housing markets of many regions were also influenced due to this economic crisis. Furthermore, it raised the issues related to eviction, unemployment and foreclosure in various interrelated economies1.With due consideration to this, it has been observed that European economy was also affected that in turn persuaded the government to borrow money from the International Monetary Fund (IMF) and from the other neighbor countries in order to mitigate these negative effects of global economic crisis and thus led towards the rise of Euro crisis. It is in this context that with due effect to the recent Euro crisis, Australia also had to suffer. The effect of the Euro crisis transmitted to the Australian economy fundamentally due to the reason that both the economies were strongly interrelated in terms of strong government finances and a resilient banking system2. For instance, the Commonwealth Bank decided to terminate its plan for an enclosed bond issue due to market turmoil in relation to the European crisis.