Australia Drought Could Cost $12 Billion

The Reserve Bank of Australia and a new report have warned of a hit to economic growth from the ongoing drought, with a potential cost of up to $12 billion. An extended drought would have a “significant” effect on the economy and food prices, says Reserve Bank Governor Philip Lowe, News.com.au reported. Farmers are battling drought with the worst effects in NSW, southern Queensland and northern Victoria. A new report by Commonwealth Bank has put the potential cost at $12 billion and warned of food price hikes. Lowe told a parliamentary hearing on Friday the drought was so significant the RBA board had looked at rainfall charts at its last meeting, which it had not done for some time. Asked about the outlook, Lowe said: “It depends very much on the scenario you paint for rainfall. If things return to normal fairly soon we could expect a rebound, but if it goes on like it did in the drought at the turn of the century then the effects on the economy are significant.”