The Effects of the Japanese Disaster on the Australian Economy

Nicholas Jasinski

Econ 509 – Media Report #1

April 6, 2011

Source: “Japan’s Disaster to cost Australia $2b” http://www.abc.net.au/news/stories/2011/04/03/3180988.htm?section=justin

“Troubles in Japan will affect Australia positively” http://www.whichwaytopayaustralia.com/admin/ADMINNews/templates/financial-news-article.asp?articleid=3894&zoneid=2

Summary

In the first article, Australia’s Treasurer Wayne Swan says the Japanese earthquake and tsunami is likely to cut roughly $2 billion from Australia’s export earnings. Japan is Australia’s second largest trading partner, but their economy has been hard hit by the earthquake, tsunami and ongoing nuclear crisis. “Preliminary Treasury estimates show that the earthquake and tsunami will cut demand for our bulk commodity exports in the short term and likely slash around $2 billion from export earnings in 2010-2011,” Mr. Swan said in a statement. He goes on to say that the Japanese disasters will cut a quarter of a percentage point from Australia’s growth figures, however this is on top of the half percentage point impact from the floods and cyclone in Australia. The natural disasters in Australia are estimated to have cost the economy $9 billion, a figure much larger than initially estimated and focused mainly in the resources and agricultural sectors. Coal losses account for the majority of the damage, roughly $6 billion, and limits on production will probably extend to the June quarter. The damage to crops will be close to $2 billion.

The second article on the other hand states that troubles currently affecting Japan will have a positive effect on Australia. It states that the chain of events that resulted in the catastrophe at the Fukushima nuclear power plant will “bring in the big bucks” for Australia, in particular Australian farmers. This is a result of fears surrounding Japanese produce due to nuclear contamination, so they will be importing a larger amount of goods. Australia exports more...