The massive wildfires consuming Austrailia may cost the country $3.5 billion in damages and up to one percent of its GDP, according to forecasts.
Austraila-based Westpac Bank forecast the damage done by the rampant wildfires in south eastern Australia from late last year to cost around the country’s GDP by one percent due to damage incurred by the agriculture and tourism sectors.
“Activity in the most severely affected areas accounts for around one percent of the Australian economy and is focused on agriculture and tourism,” stated the bank forecast.
“Initial indications suggest the main direct negative impacts will be on local tourism activity with potential disruptions from smoke pollution affecting the major capital cities,” it added.
The bushfires started in 2019 and is one of greatest natural disasters every experienced in Australia. Over 400,000 have been consumed by fire killing 170 people and destroying 2,029 homes.
The wildfires come at a bad time for Australia as GDP growth rate sunk to the slowest pace since the global recession in 2009. The government revised its GDP growth forecast down to 2.1 percent in 2020.
GDP growth slumped to 1.4 percent last year, according to the Australian Bureau of Statistics. The rate alarmed economists around the world, particularly a disastrous June result showing only 0.5 percent growth, and talk of a recession dominated Australian business headlines througout 2019.
Additionally, the government data also revealed that Australian consumers were spending less with retail sales dropping 0.1 percent, automobile sales plunging seven percent and home construction down 0.5 percent.