Disasters blamed for dip in Australia's growth

The hit to exports from Japan's quake and tsunami, devastating floods in its own northeast and a rallying dollar has shaved 1.0 percent off Australia's growth forecasts, according to a report. Accompanied by a slump in consumer spending, the disasters have led the Treasury to downgrade growth from the 3.25 percent flagged in November's budget update to 2.25 percent, said The Age newspaper on Saturday, citing an internal memo. The devastation and nuclear crisis in key trading partner Japan wiped 0.25 percent from economic growth, according to the memo, with Australia's summer of floods and cyclones delivering a 0.5 percent hit. Australia's currency, which has experienced a record-breaking run above parity with the greenback in recent weeks, was also stronger than had been anticipated, impacting exporters and import-competing industries. "With already patchy growth in some sectors, the impact could lead to flat or even negative growth in the March quarter, although there is likely to be a rebound in the June quarter," the memo said. The 1.0 percent growth downgrade translated to Aus$13 billion in damage, The Age said, increasing pressure on Treasurer Wayne Swan to deliver deep spending cuts in next month's national budget. Swan has already flagged an austere and potentially unpopular budget due to the floods, Australia's costliest natural disaster, with reduced revenues but growing costs. "These are impacts in the short term and there's no doubt there will be an impact on the budget bottom line this year," the ABC reported Swan as saying Saturday. "But as we go into the forward estimates, as we go into the years ahead, growth will be strong. Short-term weakness, medium-term strength."