Economic damage stemming from the catastrophic bushfires devastating Australia’s eastern states is likely to surpass the current record of $4.4bn set by 2009’s February bushfires, according to Moody’s Analytics.
Moody’s economist Katrina Ell reportedly cautioned that the fires would further cripple consumer confidence in the Australian economy, increase the likelihood of further cuts to interest rates and impact farming and tourism industries.
She expressed concern that the broader Australian economy is at risk, despite not experiencing bushfires currently, because the fire season still has months left to run.
The Guardian reports that so far, fires have charred at least 8.4m hectares across Australia, compared with 450,000 hectares devastated by the 2009 Black Saturday bushfires.
The 2009 fires had ripped through densely populated rural areas north of Melbourne, killed 173 people and was close to destroying the town of Marysville.
At this stage, authorities believe 25 people are known to have died in this season’s fires, while causing significant damage to several towns such as Cobargo and Mogo on the NSW coast and Mallacoota in the fat south-east of Victoria.
Ms Ell cautioned that while previously, areas where the fires had occurred in 2009 suffered economically, however the scale of this season’s fires are likely to have more significant spill-over effects.
“But the risk of there being broader macroeconomic spillovers this season are high given the scale of the fires, as well as the fact that it is still early in the bushfire season and the existing fires are yet to be contained,” The Guardian quotes Ms El as saying.
“Damage to fresh produce will put upward pressure on consumer prices, given that most fresh fruit and vegetables consumed at home are sourced locally,” she said.
Tourism bodies around Australia have said it will cost hundreds of millions of dollars to rebuild and return to a state of normality.
The economic impact has been particularly severe on Kangaroo Island, off the coast of South Australia, where tourists have been evacuated, farms devastated and timber plantations burned.
On Wednesday, Kangaroo Island Plantation Timber told the stock exchange about 90% of its timber had been affected by the fire, which has burned the western third of the island.