Bushfires and the Australian Economy

Wednesday, January 22, 2020

The Australian bush fires have been horrific and very widespread and likely will involve more than a short-term disruption to economic activity.

Key points
 
  • The bushfires are expected to result in around a 0.4% hit to GDP mainly in the March quarter followed by a rebuilding boost.
  • The hit to consumer spending and tourism is likely to linger longer.
  • The drag on economic activity has increased the pressure for more monetary and fiscal stimulus. We still see the RBA cutting the cash rate to 0.25%.
  • The bushfires likely increase the pressure for more action on climate change and highlight the need for investors to be aware of industries and businesses that are vulnerable to climate change risk.

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