Australia: Floods to dent economic growth
January 23, 2011
The worst floods to hit Australia in 35 years are expected to weigh heavily on the outlook for the Australian economy this year. Between December and January, a severe flooding hit the northeastern state of Queensland and in particular its capital city Brisbane, leading to an estimated 30 casualties with 9 people still missing. During January, floods extended further south, hitting the states of New South Wales and Victoria. According to a note published by the Treasurer and Deputy Prime Minister Wayne Swan on 23 January, the consequences of the floods will be felt particularly in the coal sector where exports are likely to decline. Queensland produces 80% of Australian coking coal, which represents 10% of total Australian exports. Moreover, Swan acknowledged that other sectors of the economy are also feeling the effects of the floods, particularly agricultural production, tourism, retail and manufacturing. The government will provide a preliminary estimate of the economic impact of the floods on 28 January. According to preliminary private sector analysts, the damages could amount to almost USD 20 billion. The Australian government is currently debating the most appropriate measures to pay for the damage and assist rebuilding efforts. The option gaining the most traction among policymakers is a national levy; however, business is also likely to be required to supplement this assistance. The Prime Minister Julia Gillard will address the nation on 27 January where she is expected to make an announcement regarding policy measures.
Author: Armando Ciccarelli, Head of Data Solutions