The floods in late 2010 and early 2011, as well as Cyclone Yasi, were a devastating blow to the people of Queensland, confidence and the broader economy. The natural disasters occurred at a time when a high Australian dollar, relatively high interest rates and weak construction sector were already causing the Queensland economy growth issues. The natural disasters are estimated to reduce economic growth in Queensland by 2.25 percentage points in 2010-11. In terms of the economy; coal, agriculture and tourism exports are expected to be $A7bn lower.
Significantly, an expected 27 million tonnes of coal are anticipated to be cut from exports and recovery is taking longer than originally anticipated due to water and environmental issues. The Reserve Bank of Australia
(RBA) recently suggested that only two-thirds of the recovery in coal production has occurred to date and it is not until 2012 that full production is expected to resume.
Sugar, horticultural and other crops were also all damaged from the weather events and a strong Australian dollar has also compounded weaker tourism volumes due to the bad weather. Depending on the crop, recovery of volumes may not occur till 2012 and as most consumers are aware, the price impact on fruit has been extreme. For example, banana prices have risen 400% and supply and quality have been low.
The severe flooding and Cyclone Yasi is estimated to have made 3,000 dwellings non-liveable. And more than 50,000 dwellings are damaged and in need of repair. Rebuild activity and resumption of normal coal exports should exert a mild expansionary force on the Queensland economy over the rest of 2011 and into 2012.
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