Australians curbing spending as impact of bush fires hits, Latest Business News - The New Paper

Australians curbing spending as impact of bush fires hits

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SYDNEY: Australians are beginning to tighten their purse strings because of the country's deadly bush fires, according to a survey released yesterday, a sign that the economic impact of the crisis is likely to deepen.

As the authorities warned that a days-long respite from high fire danger was coming to an end, economists said the cost to Australia's A$1.95 trillion (S$1.8 trillion) economy could be as high as A$5 billion.

That would shave around 0.25 points off gross domestic product in the December and March quarters, a development that some economists said could prompt the country's central bank to cut rates as early as February and lower its growth projections.

Consumer sentiment in January was a hefty 6.2 per cent lower than a year earlier, according to the Melbourne Institute and Westpac Bank survey released yesterday.

Consumer sentiment data is considered a leading indicator, running ahead of actual spending data.

"The risk is that as economic loss from the bush fires materialises, consumers could still become more cautious in February," said Citi economist Josh Williamson.

The huge bush fires have cut through the country's east coast during the peak summer months when many businesses usually rake in earnings from both domestic and foreign tourists.

Agricultural sectors, particularly the dairy industry, have also been hard hit.- REUTERS