Australia’s economy is likely to be further weighed down by wildfires that have scorched an area larger than the Republic of Ireland and could intensify in coming months with more hot, dry weather predicted.
Goldman Sachs Group Inc. sees immediate economic hits to private investment and farm production, with a drag on tourism deepening over coming months. This will be partly offset by a lift in fiscal spending — including military deployment — translating to a positive contribution from government consumption to GDP.
“The unprecedented physical scale of the current bushfires could amplify the headwinds to farm production or international tourism exports, while the unprecedented smoke haze around major population centers could weigh on spending in communities not directly affected by the fires,” said Andrew Boak, Goldman Sachs chief economist for Australia.
Images of burnt koalas, major cities clogged with acrid smoke and tourists herded onto beaches as a last redoubt against firestorms have been beamed around the world, threatening lasting damage to Australia’s reputation. This could see a longer-term fallout beyond the 0.2-0.4 percentage points expected to be shaved from GDP growth in the near-term.
RBA Bets
Traders are pricing in about 60-per-cent odds the central bank will lower interest rates by a quarter point at its Feb. 4 meeting and government bond yields to three-and-a-half-week lows. The Australian dollar fell on each of the first five trading days of the New Year to be the weakest developed-nation currency over the period.
While some of the angst in markets reflects a flight to safety following the escalation of tensions between the U.S. and Iran, the Aussie dollar’s under performance relative to other currencies suggests there’s also been a drag from the bushfire impact on Australia’s fragile consumer.
Commonwealth Bank of Australia, the nation’s largest lender, says business disruption will see regional economies and tourism particularly hurt. CBA says its PMI already shows “some bush fire impact and leading indicators like accommodation searches are already dropping away.” The bank estimates tourism accounts for 3.1 per cent of gross domestic product and 5.2 per cent of employment.
The government has already announced compensation for volunteer firefighters, deployment of military assets, including the call up of reservists, and a A$2 billion (US$1.4 billion) bush fire recovery fund. These could provide some offset to the pullback in private sector activity.
Shane Oliver, chief economist at AMP Capital Investors Ltd. in Sydney, says the economic hit comes at a time when growth is already weak. “It risks knocking March quarter growth to near zero or below,” he said, adding that while the risk of recession has increased, the country’s 28-year run without two consecutive quarters of contraction is unlikely to end this time.
With more than 120 fires still burning in New South Wales state alone, and the southern hemisphere summer barely underway, the death toll — currently at least 25 people — and devastation could further mount. The blazes have destroyed 25 million acres of forest and bush, razed 1,800 homes and caused the deaths of an estimated half a billion native animals.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
