Natural disasters 'hit Australian economy hard'

The recent spate of natural disasters in Australia are expected to have a lasting impact on the country's economy.

According to new data from the Australian Bureau of Statistics, Australia looks set to suffer its biggest contraction for 20 years – which could have a far-reaching impact on everything from savings rates to home loan availability.

However, the major reduction in output is not expected to be long lived.

Moody's Analytics economist Matthew Circosta told Dow Jones Newswires that while the current slump is much worse than many had predicted, "Australia will recover and growth will be stronger in subsequent quarters through the end of the year".

The disasters, including flooding which affected 70 per cent of Queensland, reduced growth by 2.4 per cent – essentially stalling the recovering economy, according to the news provider.

And it seems that the short-term growth projections are having a huge impact on the number of home loan approvals, which fell by 1.3 per cent in April.

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