Impact of Floods on Australia's GDP - Talking Business 2011 Ep 1c

A review of the week in business, with expert analysis and commentary

Leon and Garry talk about the impact of the floods driving down Australia’s GDP and hitting the agriculture, transport & logistics and mining sectors. Tourism will also take a short term hit as will insurance. The floods have already affected Australian companies like Woolworths and Virgin Blue which have come out with profit warnings. Meanwhile, Coles has beaten Woolworths for a sixth consecutive quarter on comparable store sales. The Government’s flood levy will see a two tiered scheme that will generate $1.8 billion. It is expected to have a minimal impact on the Australian economy, although polling shows that nearly half the electorate favors scrapping the NBN to pay for the damage. The RBA is expected to stay on hold for the next few months as the economy absorbs the impact of the floods and the latest figures show the economy is slowing down. Capital city rents are sent to rise by 7 per cent this year, according to RP Data. Access Economics warns that skills shortages will be the big issue this year. Inflation is heading down. Convergence will be the big issue in 2011 with Ten Network being the first television operator launching an iPhone app. Institutional shareholders tell BHP Billiton and Rio Tinto to forget about mega deals and instead focus on share buy backs. They have even threatened to vote against the boards if they don’t. Regional broadcaster is poised to take over Austereo with a $741 million deal. Australian houses prices are flattening out with the latest figures suggesting we won’t be seeing massive growth this year. A fuel monitoring agency has accused the supermarkets of slugging motorists with higher petrol costs to pay for cheaper milk and bread. NAB’s website crashes again, a legacy of an outdated system that needs attention. And Treasurer Wayne Swan has given his strongest indication that the government might shift Warwick McKibbin off the RBA board. McKibbin had clashed with the government over the flood levy.

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Garry Barker and Leon Gettler
Business, Economics, RMIT