As the disaster-ravaged state of Queensland dusts itself off from Cyclone Yasi, economists are warning that Australia’s latest tussle with nature could wipe more than $2 billion off the country’s gross domestic product. Food prices and insurance premiums are expected to rise, while a vital tourism and agricultural area has been decimated.
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Still, considering Yasi was a category five cyclone only a little smaller than the United States, analysts are saying Australia should consider itself lucky.
“It certainly could have been a lot worse,” says Luke Mathews, a commodity analyst with the Commonwealth Bank of Australia.
Yasi flattened properties, overturned luxury yachts, and ripped up plantations along a 125-mile-stretch of Queensland’s picturesque coast when it came ashore with winds of more than 125 mph late Wednesday night. On Thursday some 130,000 properties remained without electricity as Australia deployed 4,000 soldiers to help with the recovery effort. At least one person is known to have died in the cyclone, asphyxiated by fumes from a generator operating in a small room.
“We were extremely lucky from an economic perspective," continues Mr. Mathews. "We were lucky because of where Yasi crossed the Australian coast, which avoided major population centers, and we were lucky because it avoided key mining infrastructure and assets. But certainly the agricultural industry will be impacted.”
Agricultural losses from Yasi are already being put at $1 billion, while $300 million in coal exports have been lost because of suspended business operations and port closures. Queensland’s latest natural disaster bill comes as the state recovers from January floods that covered an area larger than Texas and California combined and caused $5.6 billion in damage.
Damage to Queensland’s sugarcane crop is expected to weigh in at $500 million, representing about 30 percent of Australia’s harvest. Australia is the world’s third-largest sugar exporter. World sugar prices rose to a 37-year-high after news of Yasi broke. They dropped significantly Thursday, but were still trading some three times above the long-term average.
Likewise, the price of bananas is expected to soar by up to 500 per cent after three quarters of the nation’s crop was wiped out. Queensland’s banana industry, worth some $400 million, was only just getting back on its feet following Cyclone Larry in 2006 which decimated 90 percent of the nation’s crop.
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