Recommend Print


Queensland Floods: Economic Impact

Qld floods threaten GDP by 0.3%

By Michelle Hammond
Wednesday, 12 January 2011

The devastation of the Queensland floods has quashed earlier predictions of a minimal economic impact, with economists now fearing the floods could cut Australia’s GDP by as much as 0.3%.


The cities of Brisbane and Ipswich have joined the long list of towns already affected by the floods, with the Brisbane River bursting its banks and flooding hundreds of homes.


Businesses across the State have shut their doors, with staff ordered to stay at home for the next few days as flood levels peak.


Reserve Bank board member Warwick McKibbin says Queensland’s economy could be hit by a GDP loss of 1%, costing it a total of $13 billion.


According to Westpac, the overall impact depends on a range of factors including the stage of the growing season key farmers were in when the floods hit, the extent of infrastructure damage, and the duration of disruptions to business activity.


“It’s likely to be several weeks at least before even some of the most basic parameters are known,” Westpac says.


“Overall, we see a ballpark estimate of a 0.3% hit to annual GDP as a reasonable assumption, with inflation being boosted by 0.1% to 0.2% in Q1.”


“The timing of the hit and recovery means we could see Q1 GDP drop by as much as 1% before the recovery boost growth in the following quarters.”


Prime Minister Julia Gillard has acknowledged the financial aid required as a result of the floods poses a threat to the government’s pledge to return to surplus by 2012-13.


Gillard says the government will continue to give financial assistance to small business owners who have been impacted by the crisis.


In addition to grants and concessional interest rate loans, flood-affected businesses have been given a reprieve by the Australian Tax Office.


Businesses will have their lodgement and payment dates for December activity statements deferred to February 21, a month later than initially required.


The ATO says it can help flood victims by fast-tracking funds, giving people extra time to pay debts without interest charges, and helping reconstruct tax records where documents have been destroyed.


Meanwhile, insurers have already been hit with hundreds of insurance claims, with analysts estimating the floods could cost the insurance industry more than $1 billion.

Comments (0)

Subscribe to this comment's feed

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.

Invalid Input

Follow us

StartupSmart on Twitter StartupSmart on Facebook StartupSmart on LinkedIn

Subscribe to StartupSmart RSS feeds


  • BOOKED for Lunch - Google+ for Business
    Every week, millions more people sign up for Google+. Suddenly, it's today's hottest new social network. A new book - Google+ for Business - reveals why...

  • Get the Sale
    For a business to be successful, it needs to sell something. Often, LOTS of something. Whether that something is a product, an idea or a service, the key to...

  • Google Adwords for Small Business
    Get found, attract more customers and track results easily. Many small businesses are unable to afford traditional, expensive ways of advertising. And those ...

  • Demystifying the Cloud
    How smart businesses use technology to reduce costs and increase efficiencies How can small businesses increase capacity or add capabilities on the fly...

Sponsored Links

Our Partners

  • NAB the only bank not to pass on full rate cut, but claims to still...
  • Docklands development Yarra Point three-quarters sold as Mirvac says the price is right
  • Super-rich build their SMSF nest eggs with property, particularly commercial
  • Rate cut based on flawed reasoning: Steve Keen
  • Former RBA board member calls 25-point cut a 'silly situation'