The devastating earthquake and tsunami in Japan will cost Australia A$2 billion (US$2.07 billion) in lost export earnings, trimming economic growth, Australian Treasurer Wayne Swan said yesterday.
Japan is the country’s second-largest trade partner after China and the seafloor quake and tsunami on March 11, which left about 28,000 people dead or missing, damaged ports and power stations.
Australia is the world’s biggest shipper of coal and iron ore, and Swan said the catastrophe would leave its mark on the Australian economy.
“Preliminary Treasury -estimates show that the earthquake and tsunami will cut demand for our bulk commodity exports in the short-term and likely slash around A$2 billion from export earnings in 2010-11,” he said. “This could subtract less than a quarter of a percentage point from GDP growth this financial year, and comes on top of the half a percentage point impact from the floods and cyclone at home.”
“Japan’s nuclear situation and power shortages continue to weigh on international financial markets and may prolong the impact of this crisis on the global economy,” Swan said.
The hit to the economy comes after the Australian Treasury said destructive floods in Australia this year could cost up to A$8.3 billion in lost coal production — a sharp increase on earlier projected losses.
The huge deluge that swamped coal-producing Queensland State in January caused significant damage, halting mine production and cutting key transport infrastructure.
The government has estimated the floods, which covered an area the size of France and Germany combined and were followed by destructive Cyclone Yasi, will cut coal production by about 15 million tonnes in the last quarter alone.
However, businesses expect total coal production losses to be much higher, roughly between A$5.5 billion and A$8 billion.
“No one was ever under any doubt that the financial toll of the devastation we’ve seen in Queensland and elsewhere in Australia this summer was going to be substantial,” Swan said. “The latest figures back that up and indicate the cost is likely to be even larger than we initially thought.”
The twin natural disasters are expected to weigh heavily on the Australian budget due to be announced on May 10, which will seek to balance their costs against inflationary risks caused by an unprecedented Asia-driven mining boom.
Swan warned of tough decisions ahead.
“These events all have -significant implications for our budget as well as our economy,” he said. “Weaker growth will clearly mean that revenues take a substantial hit in the near-term, and this comes on top of the rebuilding and recovery costs in Queensland. As the prime minister said last week, there’ll need to be some tough decisions in the budget as we stick to our strict fiscal rules.”
Australia, dubbed the “wonder from Down Under,” was the only major Western economy to avoid recession during the financial crisis thanks mainly to its coal and iron ore exports, and an emergency stimulus package.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure