Australia’s latest floods disaster will have a minimal economic impact nationally despite some damage to rail lines, mines and crops in certain areas, Australian Treasurer Wayne Swan said yesterday.
In recent weeks record floods have swamped large areas of New South Wales and Queensland, prompting fears of a repeat of last year’s floods, which put a significant dent in Australia’s GDP for the financial year to June last year.
“Despite the terrible impact on affected communities, we’re not expecting the flooding to have a significant impact on the national economy at this stage,” Swan wrote in a regular economic note.
“While the heavy rainfall has resulted in the temporary closure of several rail lines and caused disruption to some coal mines, it hasn’t caused any significant disruptions to major coal mining operations in the Bowen Basin or the Hunter Valley,” he wrote. “And while some crops are likely to be affected by the damage to farm land, Treasury advises the impact on the supply and prices of fresh produce is not expected to be great.”
Swan said Australia’s economy continued to do well, forecasting output in the key resources sector would increase by about 77 percent by 2020.
The floods forced thousands of people from their homes and killed one person.
On Saturday, Australian Prime Minister Julia Gillard toured the flood-hit town of St George in Queensland, where she said A$1.9 billion (US$2 billion) of funding had been released to the state government in recent days to help it combat the latest disaster.
However, Swan said Australia’s economy, buoyed by demand from China for iron ore and coal, is feeling the impact of a global slowdown as employers defer hiring new workers on European uncertainty.
While Australia can still expect “solid growth,” the global environment and gains in the nation’s currency will affect non-mining sectors such as manufacturing, he said.
“We shouldn’t pretend that there’s a simple solution,” Swan said. “The affected businesses will need to do more to adapt, to improve their efficiency, to spot new opportunities, to find new markets and to design new products.”
The Reserve Bank of Australia sees average growth of 3.5 percent this year, down from last year’s Nov. 4 estimate of 4 percent. Consumer prices will rise 3 percent in the year through to the fourth quarter, less than a previous prediction of 3.25 percent, the central bank said on Friday.