Flooding and cyclones cause Australia’s economy to shrink

A cyclone in Western Australia in February disrupted iron ore shipments while another cyclone and flooding in eastern Australia last November disrupted production at a majority of coal mines Unprecedented flooding and storms that hit key exports such as coal and iron ore caused Australia’s economy to shrink by 1.2% in the first quarter of this year compared with the last quarter of 2010, government data showed Wednesday. It was the largest quarterly contraction in GDP since 1991, when Australia experienced its last recession. It is also the first time that GDP has fallen since the last quarter of 2008, at the height of the global financial crisis. Treasurer Wayne Swan said he was not surprised by data from the Australian Bureau of Statistics that showed flooding and cyclones had slowed annual growth to 1 % through March 2011. That was down from 2.7% in calendar year 2010. Lost production totaled A12bn (£7.7bn), with A$6.7bn of that in the March quarter alone. Swan predicted a “strong rebound” in the quarter ending in June, due to the underlying strength of the economy. A cyclone in Western Australia state in February disrupted iron ore shipments while another cyclone and flooding in eastern Australia last November disrupted production at a majority of coal mines while damaging railway lines and ports. While Australia was the only wealthy country to avoid recession during the global economic crisis, the data point to a weak spot in an economy heavily reliant on Chinese hunger for raw materials. China and other emerging Asian economies are major importers of coal, Australia’s biggest export. Opposition Treasury spokesman Joe Hockey said while the result was expected, it also demonstrated that the economy was not robust enough to withstand government plans to impose new anti-pollution taxes on mining company profits or on high income earners to pay for flood reconstruction. “What is clear is this – if the mining boom has a cough, the Australian economy can suffer pneumonia,” Hockey said. Global economy Australia Economics guardian.co.uk

Posted by on June 1, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.