Take Five: The burning bush

Cochin Herald|January - February 2020

Take Five: The burning bush
A swathe of Australia the size of South Korea is being razed by fire.

HEAT DOWN UNDER

A swathe of Australia the size of South Korea is being razed by fire. The toll so far: 27 lives, more than 1,800 homes, a billion animals. But that's probably a fraction of the eventual costs. Analysts who have done the sums expect a drag as much as 0.4% this quarter on an economy already stuck in second gear. Given the bushfires have consumed an area 20 times greater than a similar conflagration in 2009, the cost will dwarf the $3 billion price attached to that disaster.

Apocalyptic images of holidaymakers taking to the sea to escape flames could weigh heavily on tourism, which accounts for over 3% of Australia's economy. A policy reaction is likely; money markets are already pricing in monetary easing, flirting with an even chance of an interest rate cut in February. Last year, they had assigned a less than 30% probability. The Aussie dollar is down 2% so far in 2020.

But the government has resisted linking the crisis to global warming. Its intransigence is likely to bring longer-term political costs. The fires add carbon emissions while decimating vital carbon-absorbing forests, so scientists are warning of more frequent and intense fires in future.

CHINA - HOME AND ABROAD

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January - February 2020