Australia’s most notorious location for severe cyclones, has been hit yet again early last week with Cyclone Debbie. Tropical Cyclone Debbie became a category four at one stage and struck land between Bowen and Mackay (along the coast) on Tuesday with destructive winds and torrential rain. It is said to have caused billions of dollars of damage to homes, businesses and agriculture.
Major shortages of Sugarcane, Capsicum, Tomatoes and Eggplant expected in the short-term as major crops are obliterated by the storm.
Farmers were cut off from their crops for up to four days due to severe flooding in the region and some farmers say it will take years to re-establish crops. The months of May and June are said to be the months that Australians are likely to see significant price hikes in the affected crops, due to such a large dip in supply. Australians will especially notice the impacts of the limited supply of sugar as around 62% of sugar produced in Australia is harvested in this region. Although the full extent of impact has not yet been calculated, Bowens agriculture industry is said to be valued at $450 million with at least $100 million in damage. The whole region is valued at nearly $1 billion each year (of GDP). However, although the extent of the damage is significant, economists presume the impacts of the shortages on price will be mostly short-term unlike the drastic effects on price the banana shortages from Cyclone Larry (2006) and Cyclone Yasi (2011) managed to cause.
Major industries including Coal and Tourism expected to slow in the coming months.
Minor impacts on coal mines result in a slow in the production of coal in the coming months, but the impacts are expected to be fairly moderate and not create a massive impact on Australia’s Gross Domestic Product. However, the tourism industry has already dropped by 50% and is expected to stay relatively low over the next year, as this part of Queensland begins to rebuild.
Impact on Australia’s economic growth
Analysts predict the impact on growth will be low as the disaster occurred at the turn of the quarter. Loss in production is said to be made up before the end of the June quarter and therefore the disaster will not be reflected in the numbers. In fact, the repairs and need for new infrastructure will likely create a boost in economic activity over the coming quarters, however in the short-term, households are without homes and workplaces and businesses need to set out to rebuild, so current levels of living standards are low (material and non-material). GDP will reveal major losses in production of just less the $1 billion, with not only the loss in agriculture, but a disruption of exports.