Tragic bushfires, continuing for months, have burned millions of acres of land besides destroying hundreds of homes.
The devastating bushfires have hit the country’s two most populated areas – New South Wales and Victoria – harshly, disrupting tourism. Analysts are expecting a 0.3 per cent fall in the nation’s economic growth over the December and January quarters owing to the bushfire crisis.
Moreover, the speculations of an interest rate cut in February have also increased. It is worth pointing out that the RBA has cut its interest rate for the third time over the year to a record low level of 0.75 per cent in October 2019.
Experts continue to expect the RBA to signal downside risks from bushfires to the country’s economic outlook in its next month monetary statement. However, they do not expect the RBA to modify its central forecasts at the present moment.
Raging Bushfires Impact Job Ads in December
As per the recent figures announced by the Australia and New Zealand Banking Group Limited (ASX:ANZ), the total job advertisements fell by 6.7 per cent month-on-month in December due to escalating bushfires in the Australian states.
The job ads dipped to their lowest level since April 2016 in December 2019, averaging 142,569. The drop in December follows a 1.8 per cent decline in November 2019.
The fall in the number of job ads was greater than the analysts’ expectations during the final two weeks of December, signifying the disastrous effect of wildfires. Experts are also anticipating a negative impact on employment in the short-run due to the ongoing bushfires.
Tourism Hard Hit by Bushfire Crisis
In addition to bringing discomfort for the domestic residents, the bushfires have become a cause of concern for the international travellers and tourists.
In South Australia, fires have destroyed national parks, wiping out thousands of koalas from the Kangaroo Island. The island’s farming and tourism were severely hit by bushfires that went out of control after harsh weather conditions last week.
Though the fires are quite far from major tourist attractions, travellers are still worried over the safety of the Australian cities. Market experts are anticipating a drag on international tourism of about 3 per cent over the first half of the current year.
Due to continuing bushfires, the nation’s government agency, Tourism Australia has halted its $15 million ‘Matesong’ campaign targeted at encouraging UK travel to Australia. As per the agency, it is too early to measure the complete impact of the bushfires on tourism sector in terms of international visitation to Australia.
Morrison Government Committed $2 billion for Relief Support
Australian Prime Minister, Mr Scott Morrison has committed to pumping $2 billion over the next two years into the national bushfire recovery fund. The PM has announced that the National Bushfire Recovery Agency will be funded with USD 1.38 billion or $2 billion to assist bushfire impacted communities to recover.
The national bushfire recovery fund is expected to support farmers, primary producers and local governments and deliver mental health assistance to first responders. The fund will operate along with three levels of current disaster relief payments accessible through the Commonwealth.
Mr Morrison has committed to provide further funds if the initial amount stands insufficient to overcome costs. Moreover, he confirmed that twenty Services Australia "pop-ups" will be rolled out in affected areas to make sure citizens know what payments and resources are available.
In addition to the federal government, some companies have also come forward to support fire-affected communities.
National Australia Bank Limited (ASX: NAB) has raised the standard of corporate donations by announcing $5 million in support for the affected communities.
Moreover, ASX-listed Coca-Cola Amatil has recently announced that it is donating at least 250k water bottles and Powerade to help families being evacuated from fire zones in South Australia, NSW and Victoria or in disaster recovery centres and bushfire emergency crews. The Company mentioned that the bottles are being delivered to air ambulance services, Australian Defence Force units and Foodbank for distribution to those in trouble.
Besides corporate support, Australia has also received assistance offer from the US and other countries (including Fiji). The American President has recently called Mr Morrison, offering support to deal with the bushfire crisis.
Though Australia continues to receive support from corporates, the federal government and other countries, the existing situation in the nation is worrisome.
The escalating bushfires are leaving a sizeable dent on ASX-listed companies, especially insurance players due to mounting insurance claims. Amidst the current scenario, market experts expect a drag on private investment and farm production, and thereby economic growth in the near-term.
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