Economic impacts of natural disasters

Impact of natural disasters

The recent natural disasters both at home and abroad have had a significant economic and fiscal impact.

The domestic natural disasters are expected to reduce real GDP growth in 2010‑11 by ½ of a percentage point. Adding the effect of the Japanese and New Zealand earthquakes raises the total impact on GDP growth in 2010‑11 to ¾ of a percentage point.

The domestic natural disasters are expected to directly reduce real production by $9 billion.

Coal production in Queensland has suffered the largest direct impact, with losses estimated at around $6 billion.

Agricultural production losses are estimated at $1.9 billion, and have been accompanied by price rises for some agricultural products — adding around ½ of a percentage point to inflation over the March and June quarters of 2011.

The domestic disasters also reduced activity across a range of other sectors, including the tourism and retail sectors.

However, the disasters have not knocked the economy off course. We have strong growth prospects, falling unemployment and unprecedented levels of mining investment.

Reconstruction and the resumption of economic activity is also expected to add to GDP growth in 2011‑12.

Rebuilding communities

Infrastructure rebuilding will provide an important platform for economic recovery, helping communities return to business as usual.

The Government is providing $5.4 billion to the States for recovery from recent disasters. The bulk of this will go to rebuilding public infrastructure like roads, bridges and public buildings.

Delaying some existing projects will make room for the rebuilding effort, and help curb emerging skills shortages.

A suite of jobs and skills measures is also helping to address skills shortages. These include relocation assistance, fast‑tracked visa processing, training initiatives and wage assistance.