Question

Unprecedented bushfires impacted the Australian economy in late 2019 and early 2020. Explain:

1. One economic mechanism by which bushfires has increased the Australian GDP (even if it was detrimental to well-being) (answer in 140-260 words).
2. One economic mechanism by which bushfires has decreased the Australian GDP (answer in 70-130 words).

Answer 1

The unprecedented bushfires impacted the Australian economy in late 2019 and early 2020 and one more thing I want to explain before explaining the mechanism.Australia's bushfire season season has caused catastrophic damage, but the economic cost of natural disasters could be less harmful if government investment in building resilience is made a priority.

Total costs are likely to be substantial,but the same isn't necessarily true for the impact on measured GDP growth.that's largely because GDP can't capture many of the intangible costs involved.It's also because previous natural disaster experiences suggest activuty often tends to recover quite quickly,as the short-term disruption to growth is followed by a positive impact from rebuilding.This doesn't account for opportunity costs whereby resources devoted to reconstruction are unavailable to be deployed elsewhere. And it doesn't allow for the risk of outsized adverse effects on national business and consumer busuness and consumer confidence, or the possible productivity sapping effects of air pollution.The Australian fires of 2019-2020 brought acute environmental and economic damage to the continent.Following an extended period of abnormally dry,windy weather,Australia experiencedone of its worst fire seasons on record. From September 2019 to January 2020,"bushfires" decimated an eatimated 20 million acres, accounted for 25 human deaths and half a billion animal fatalities.Accuweather also predicts the wildfires will affect Australia's 2019 GDP,which was tracking at roughly.of real that will occur due to increasing insurance premiums and other negative impacts.AccuWeather predicts the wildfires will lower Australia's 2019 GDP to 1.5%.Such a major impact on the economy of a nation is rate but not unprecedented,"said AccuWeather Founder and CEO Dr. The devastating bushfires in Australia will impact the country's gross domestic product growth.Bushfires stimulate GDP by creating more demand for health services,even as the victims suffer from smoke inhaltion,burns or post traumatic stress disorder. Take together we expect a detraction fromGDP due to the bushfires of around 0.4% starting in the December quarter but mainly impacting the March quarter before a rebuilding boost kicks.