They’ve devastated Brisbane and many other areas, and now there are fears the floods could also cause extensive damage to the national economy, slashing growth by as much as one per cent.
Alan Oster, NAB Chief Economist, says the floods could cost around a quarter of a percentage point off in the December quarter “and the best part of point eight per cent off in the march quarter”.
The most significant impact could be on the coal industry, with NAB saying exports could be cut by 20-per cent.
Agricultural production has also been hit: the value of the wheat crop is forecast to fall by a billion dollars.
“In agriculture the crops are essentially wiped out, in mines you’ve got mines that are flooded and that’s going to affect the volume of exports”, Mr Oster told SBS.
And the floods could also exacerbate the shortage of skilled workers.
With an already tight jobs market, builders and other tradespeople are expected to move to Queensland to help with reconstruction, and it may not be enough.
“We will have to be bringing in workers from abroad to make sure that we don’t have bottlenecks and breakdowns with the recovery process in Queensland”, says Craig James of Commsec.
But there is a silver lining, as the rebuilding of homes and businesses could give the economy a bounce in the second half of the year.
Some believe it could even offset the fall in economic growth.
The building industry says it will provide a timely boost.
“In a perverse sense this will be a shot in the arm for an ailing sector once the reconstruction work commences throughout the course of 2011 and beyond”, Peter Jones of Master Builders Australia says.
Jones says Queensland’s construction sector had been hit hard by the economic downturn, while there’s intense debate about how the floods will affect interest rates.
Economists say that because the floods will cut economic growth, another rate rise isn’t likely until the second half of the year.
However, economists such as Alan Oster do expect food prices to rise.
“You’re going to have lower growth – that means fundamentally the economy’s going to be producing lower inflation”, he says.
“You’ll get spikes in things like fruit and vegeatble prices but the reserve bank will look through that.”
Nonetheless, economists agree interest rates are likely to rise before the end of the year.