Australian Bushfires to Push Economy Towards a Long-term Recession
As per recent reports, the Australian bushfires can be the foremost reason to push the economy into a recession for the first time in nearly three decades. The uncontrollable fires have already burnt more than six million hectares of bushland, majorly impacting flora and fauna of regions in and around New South Wales and Victoria.
Even before mother earth started raging fires, analysts claimed that retail sales were struggling with cash register activity during the previous financial year, which reported weakest annual growth since 1991 recession. Several companies have reported the extent of losses caused by the Australian bushfires. From the agricultural industry, vineyard businesses to insurance companies, every sector is feeling heavy blows.
The worsening Australian bushfires have forced the federal Treasury to reduce the budget surplus planned for 2019-20 from $7.1billion to $5billion, last month. On January 6, the owner of tourist parks in idyllic beach towns like Tomakin on NSW south coast, Aspen Group reported that it has turned away holidaymakers from its rentals due to the fires and is estimating a loss of A$500,000 in its revenue.
A firm which leases farms to Australia’s largest listed fruit and vegetables grower Costa Group – Vitalharvest Freehold Trust said that the fires had devastated a packing shed along with the equipment and vehicles at one of its berry farms. The firm claims that the farm accounts for six percent of its berry plantings.
On the stock exchange front, Kangaroo Island Plantation Timbers had requested a trading halt till today, considering the need to assess the “current fire situation”. The popular South Australian holiday spot witnessed the death of two people due to Australian bushfires over the weekend. As per data from industry group, Dairy Australia, almost a third of the country’s milk output comes from the bushfire-affected regions.
Being the 7th largest dairy exporter of Australia and having dairy as its 4th biggest rural industry (worth A$3.3 billion), the exact impact of Australian bushfires is hard to be estimated. As per agribusiness analyst at National Australia Bank, Phin Ziebell, “It isn’t yet possible to get a full picture.”
Also, the rising smoke from the Australian bushfires have enveloped the vines at the Nicholson river Winery, levying detrimental effect on the fruits. As per owner, Ken Eckersley, the grapes are stressed and that means the flavour of the wine will be intense, leaving a major impact on the industry.
The insurance companies are also undergoing losses. As stated by the Head of Insurance Council of Australia, Campbell Fuller in September 2019, “Losses are estimated at $375 million, with a further $56 million in insured property losses in September and October.”
Recently, AMP Capital chief economist Shane Oliver estimated that the Australian bushfires could wipe off 0.25 percent to one percent of the country’s GDP growth in 2020. Speaking to the AFR, he added, “That could take us perilously close to zero or below that for a quarter.”
The Business Council of Australia is encouraging businesses to provide minimum 20 days paid leave to employees voluntarily fighting the bushfires. Some corporations including ANZ, Coca-Cola Amatil, NAB, Qantas, Rio Tinto and many more have already announced the paid leave policy. This implies major impact on the business sector in the long run. But of course, humanity comes first!
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