Natural disasters are expected to be among the key factors weighing on the Australian economy in 2023, Treasurer Jim Chalmers said.
(Bloomberg) — Natural disasters are expected to be among the key factors weighing on the Australian economy in 2023, Treasurer Jim Chalmers said.
Flooding cost the Australian economy more than A$5 billion ($3.5 billion), the equivalent of a quarter of a point of GDP in the 2021-22 fiscal year, while also fueling inflation.
Chalmers released the fresh government analysis ahead of a visit to New South Wales state to inspect reconstruction efforts following 2022’s devastating floods.
The May budget would focus in part on Australia’s disaster preparedness, warning that the country’s economy hadn’t seen the full effects yet of the previous year’s floods, he said.
“In Australia, we’re always conscious that natural disasters have the ability to throw us off course, and we expect this uncertainty to be one of the key factors weighing on our economy in 2023,” he said.
The flooding caused fruit and vegetable prices to grow by more than 16% in the year to September, the Treasury analysis showed, with fresh food prices expected to continue to increase in coming months.
Data from the National Emergency Agency showed 68% of Australians lived in an area which was affected by a natural disaster in 2022.
Last week, flooding in Western Australia’s remote northwest Kimberley Region triggered by a tropical cyclone left several outlying communities isolated, damaging infrastructure and homes.
La Nina
Australia is in its third consecutive summer of La Nina, the climate phenomenon that brings heavy rain to countries in parts of the southern hemisphere and drought to regions in North and South America.
The La Nina is slowly weakening, according to the Australian Bureau of Meteorology, with suggestions an El Nino weather system could form in 2023. El Nino typically brings unusually hot, dry weather to Australia, as well as the possibility of bushfires.
The bureau warned the usefulness of climate predictions so far out from Australia’s summer months might be limited.
“The end of a very heavy period of rainfall and flood is not the end of a period of severe weather. We just move onto another threat,” said David King, Director of the Centre for Disaster Studies at James Cook University.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.