Cyclones, Floods Take a Toll on Australian Economy

Posted June 1st, 2011 at 7:20 am (UTC-5)
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Australia’s economy shrank in the first quarter of 2011 due to a number of natural disasters that struck the country’s key mining and agricultural sectors in the country’s northeast.

The 1.2 percent drop in gross domestic product announced Wednesday by the government’s Bureau of Statistics is the biggest contraction since 1991, when Australia experienced its last recession. It is also the first since the last quarter of 2008, at the height of the global recession.

Australia’s northeastern Queensland state was plagued by deadly cyclones and floods beginning in December 2010 that shut down the region’s vital coal mining industry and affected its agricultural sector.

Treasurer Wayne Swan says the natural disasters reduced real production by $13 billion, of which $6.7 billion occurred during the first quarter. Exports slumped by 8.7 percent, which Swan says was the largest quarterly fall in 37 years.

Swan says the results were unsurprising given the extent of the disaster, but says the economy will rebound as the coal mining sector returns to full speed to meet demand from across Asia. The cost of the recovery is expected to reach more than $5 billion.