Goldman Sachs says the Australian bushfires will cut 0.3% from GDP

GS assess the impact on economic growth at minus 0.3% spread over Q4 2019 and Q1 2020

I posted earlier on how the RBA might respond with a rate cut, indeed market pricing for a Feb cut has edged higher:

• The first Tuesday of the month means its RBA day! But not this month. (Watch out for a February rate cut though).

GS, though, say no, they expect:

• the RBA to flag downside risks to the outlook from the bushfires in its February Statement on Monetary Policy, but don't expect the fires to materially impact its central forecasts or policy decision at this stage

Impacts:

• main near-term drags will be farm production and private investment down
• partially offset by a boost to government spending
• drag to international tourism … will intensify over the first half of 2020, but this should be broadly offset by a boost to residential construction
• We stress the inherent uncertainties around the current situation. On one hand, the unprecedented physical scale of the current bushfires could amplify the headwinds to growth via smoke haze around population centres not directly impacted by the fires. While on the other hand, the government's deployment of military assets, could provide a larger-than-expected boost to government consumption.