Natural disasters sink Australian economy

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The Independent Online

The unprecedented flooding and storms that hit key exports such as coal and iron ore caused Australia's economy to shrink by 1.2 per cent in the first quarter of this year, compared with the last quarter of 2010, government data showed yesterday.

While Australia was the only wealthy country to avoid recession during the global economic crisis, the data points to a weak spot in an economy heavily reliant on Chinese demand for raw materials such as coal, Australia's biggest export.

It was the largest quarterly contraction in GDP since 1991, when Australia experienced its last recession. It is also the first time that GDP has fallen since the last quarter of 2008.

Flooding and cyclones slowed annual growth to 1 per cent through March 2011. That was down from 2.7 per cent in 2010. Lost production totalled A$12bn (£8bn), with A$6.7bn of that in the March quarter alone.