Floods in Australia have dragged business conditions particularly in Queensland to depths not seen since the global financial crisis, according to a local analysis that offered a more pessimistic view than the government’s assessments.
National Australia Bank's business survey for January found the floods could wipe 1.5 percentage points off economic growth in the March and December quarters, suggesting the government is underestimating the damage.
The Australian Treasury and the Reserve Bank forecasted a 0.5 percentage-point hit this financial year from the floods, followed by a rapid recovery. The NAB survey, published Monday said the country’s business revenue slumped by 5.1% because of the floods last month and 4.4 working days were lost.
Business conditions - a gauge of several indicators such as profitability and forward orders - posted their biggest monthly fall since 2000, slumping to a near-two-year low of minus 6.
And while the Reserve Bank has said most of the damage was concentrated in Queensland's lucrative coal industry, NAB's bottom-up approach found businesses had suffered across diverse regions and industries.
Revenue losses were felt in all mainland states, while the worst-affected sectors were construction, mining, agribusiness and finance. The extent of the flood damage raises the possibility that the Australian economy will shrink this quarter - an outcome that Treasurer Wayne Swan has also said is on the cards.
''It's certainly had a pretty big impact, not only in Queensland but elsewhere,'' said Rob Brooker, the head of Australian economics at NAB. ''If you've got construction, mining and retail in Queensland all suffering, then that does tend to spread into other states.''
Mr Brooker said the bank was expecting a bounce-back during reconstruction, but growth would still be behind its pre-flood rate at the end of the year.
The survey, conducted late last month, found confidence had rallied strongly after the worst of the floods had passed. It did not take into account cyclone Yasi, which economists say could trim a further 0.6 percentage points off economic growth this quarter.
The bank's analysis comes as companies continue to count the cost of the summer's wild weather. The Insurance Council of Australia will release this week the latest estimate of and is expected to raise its 1.5 billion US dollars figure.