USDA Forest Service Director Fire and Aviation Management in a dispatch center at the State Control Centre in Victoria, Australia | WIKIMEDIA COMMONS
Raging fires across Australia have caused a significant blow to the local communities and businesses, with the total cost to the Australian economy estimated to have already surpassed $2 billion as of January 7, according to The Sydney Morning Herald. Businesses spanning a wide range of industries are suffering. Fires have hit Victoria, home to ⅓ of Australia’s milk production. The large percentage of livestock killed in the fire is expected to have a significant impact on this A$3.3 billion industry ($2.2 billion USD). The wine industry has also been impacted, with up to ⅓ of grape vines destroyed in the Adelaide Hills, according to BBC. Many stock prices have already experienced a decline, for example The Economic Times reported that Bega Cheese saw a 9% decrease. Kangaroo Island Plantation Timbers has requested a trading halt on the stock market to prevent a similar drop. Australia may even see a negative growth in GDP this quarter, as Business Insider Australia reported that up to 1% of GDP growth is expected to be eliminated due to the fires.
Not only have many sectors been negatively impacted, the fires have caused consumers to spend less, thus further hurting the economy. Local communities are expected to face a 25-50% reduction to their economies, according to The Sydney Morning Herald. For many communities who depend on tourism it is uncertain if a complete recovery will ever occur, given that many visitors may decide not to return if the area has been severely hit. While the insurance, agriculture, and tourism industries are suffering, growth in the healthcare sector is expected as a result of the fires.
The New York Times reported that Prime Minister Scott Morrison has pledged $1.3 billion in recovery funds over the next two years. These funds are to be used mainly for rebuilding efforts of towns and businesses, and to provide mental health support for first responders. 1,600 homes have been destroyed, already resulting in $375 million in claims as of January 6, according to Business Insider Australia. This number is expected to reach into the billions before the fires cease.