The economic effects of the floods could reduce the nations GDP growth by 1.5% in the March quarter, with business revenue falling by 5.1% in January, according to new figures.
NAB’s monthly business survey shows a significant reduction in business conditions, with Treasurer Wayne Swan yesterday conceding the March quarter may produce a drop in GDP.
Rob Brooker, NAB’s head of Australian economics and commodities, told SmartCompany, “We’re still thinking a positive number, but the floods will certainly shave quite a lot off. We’re looking at a figure of 0.2% or 0.1%”
Mining, construction, manufacturing were seriously weakened as an average of 4.4 days work were lost throughout Queensland in January. This in turn affected insurers and the wider finance sector as Queensland’s economy fell to levels similar to that of the global financial crisis.
The survey also shows that about 22% of businesses expect they’ll continue to be operating below their normal, pre-flood level of productivity. A further 54% of respondents reported trade is back to normal and just 1% believed they’ll never fully recover.
Surprisingly, business confidence rebounded strongly, especially in Queensland, but the results of the survey predate cyclone Yasi.
Despite the optimism, many businesses said they would face restraints on recovery. About 32% of Queensland businesses believe customer demand would hold them back, as well as lack of production materials and increased lead times as a result of effected infrastructure.
Four in 10 of effected businesses believe their losses are not fully covered by insurance. Most businesses are insured for damage to physical assets, but more than half aren’t covered for loss of income.
To offset this reduced income, CCIQ (Chamber of Commerce and Industry Queensland) president David Goodwin told StartupSmart, “A small percentage of businesses most likely having to reduce staff in the aftermath of the flooding”.
Queensland isn’t the only state to feel significantly economic effects as flooding in regional Victoria has also reduced business productivity and capability.
Seven in 10 Victorian businesses surveyed reported they had some disruption, with 39% saying that they will suffer customer demand and delivery problems on the way to a complete recovery.