Thursday, January 13, 2011

Floods Tipped to Hit Economy Hard

An article by Peter Martin on highlights what I wrote about 2 days ago. That the Queensland economy, with 75% of the state declared a disaster zone, has ground to a stop. With the overall cost to the economy now tipped to hit 13 billion dollars or 1% of GDP this could be the major trigger for the housing market collapse which many have been predicting.
 ''Look at the size of the Queensland economy relative to Australia. At the moment a fair chunk of it has just stopped,'' Professor McKibbin said.
Despite this devastation Prime Minister Gillard is unwilling to alter budget spending:
As estimates of the financial damage wrought by the Queensland floods climb, the Prime Minister has ruled out loosening the budget purse strings to cope with economic shock.
''We will bring the budget to surplus in 2012-13, and yes that will entail some tough choices,'' Julia Gillard said.
Coal export are also being hit very hard with up to 75% of Queensland's coal production stopped -
''Our initial estimate is the floods could drive a 25 per cent fall in coking coal export volumes and around a 9 per cent fall in thermal coal export volumes in January,'' she said. ''This could see exports alone strip 0.5 percentage points from [gross domestic product] in the quarter.''
 The article gives the damage so far as:
Coal exports down 5 per cent.
Falls of up to 25 per cent predicted.
Projected cotton exports down 8 per cent.
Cotton, coal and ethanol prices rising.
Rebuilding to cost billions.
Uncapped disaster relief payments.
Total bill of up to $13 billion.
 In the very near future we could be adding to this list:
  • Qld unemployment hits 10%
  • House prices drop 25%
  • Qld floods force Federal Government to drop NBN
I hope not, but our economy has been on a knives edge for 12 months now and without some serious stimulus (which Gillard is saying is not going to happen) to help kick the debt can down the road this could be the trigger which brings the housing ponzi con down.

1 comment:

  1. hey to everyone at true blue perspective,
    Firtly off subject how about not only what happening in queensland with the floods, but the recent floods in victoria, to those vicorians (state of australia)it'd be good to give a comparison of the two states in terms of flood damaging. The extent of flooding is by far not understood by everybody.

    what would help most definately is if more people donated and the like to queensland. but most people watch their tv eating dinner say "hey that's a LOT of water sorta like other floods and all shall be well, oh deary me," then they proceed to think about dessert.
    if there was more donations to help business' get back on their feet i affected in queensland by these floods, would this at all reduce the time it wil take to regain economic stability? becasue julia and co doesnt seem to be doing much as they could in my opinion. So is it all really about the rest of us. because this disater is something that is going to affect all australians some way, be it them being annoyed at fruit prices, or what not, why not just each person donate something if they can, why not mc donalds (or any other big business e.g woolworths, KFC etc) donate one days profit or something. i'm sure thatd help. what needs to happen now is Australia to pull together and help each other overcome this disaster, because we each have the power to do something to help the country we love in recover economically. Helping achive this, help us too.
    So there needs to be more awareness about queensland and advertising to help, so that more donations can be made, and that money can be used to help queensland recocer in a quicker amount of time ecomoically.
    pardon the rambling.