(Reuters) - 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 holiday-makers taking to the sea to escape flames could weigh heavy 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.
(Graphic: 2019 was Australia’s hottest and driest year since 1910 JPG click, here)
CHINA - HOME AND ABROAD
Chinese Vice Premier Liu He will finally hop on a plane to Washington from Jan. 13-15 to sign a long-awaited Phase 1 trade deal. Hopefully, that will allow the world’s top two economies to bury the
