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Australian PM warning on drought Australian PM warning on drought
(about 8 hours later)
Australian Prime Minister John Howard has said that the country's worsening drought could hit economic growth.Australian Prime Minister John Howard has said that the country's worsening drought could hit economic growth.
Mr Howard said the drought, which some experts have described as one of the worst on record in Australia, would "affect our GDP growth".Mr Howard said the drought, which some experts have described as one of the worst on record in Australia, would "affect our GDP growth".
Global wheat prices surged to 10-year highs earlier this week after Australian officials warned the country's harvest could be cut in half.Global wheat prices surged to 10-year highs earlier this week after Australian officials warned the country's harvest could be cut in half.
However, Mr Howard called for analysts to "keep a sense of perspective."However, Mr Howard called for analysts to "keep a sense of perspective."
"The country overall is still doing very well," he said."The country overall is still doing very well," he said.
Abandoned cropsAbandoned crops
Australian economic growth slowed to 1.9% in the second quarter, the slowest pace in three years, although economists are expecting the economy to pick up speed in the third quarter.Australian economic growth slowed to 1.9% in the second quarter, the slowest pace in three years, although economists are expecting the economy to pick up speed in the third quarter.
Demand for grain is increasing, putting pressure on pricesDemand for grain is increasing, putting pressure on prices
Mr Howard said it "remained to be seen" how much affect the current drought would have on Australia's economy. Mr Howard said it "remained to be seen" how much effect the current drought would have on Australia's economy.
"It depends on the extent to which our booming economy in other areas can offset it," he said."It depends on the extent to which our booming economy in other areas can offset it," he said.
Australian Crop Forecasters on Wednesday cut wheat production estimates for 2006/7 to 11.5 million tonnes, from 25 million a year earlier.Australian Crop Forecasters on Wednesday cut wheat production estimates for 2006/7 to 11.5 million tonnes, from 25 million a year earlier.
The country's Bureau of Agricultural and Resource Economics last week cut winter crop forecasts by more than a third because of the extremely dry weather.The country's Bureau of Agricultural and Resource Economics last week cut winter crop forecasts by more than a third because of the extremely dry weather.
According to official figures, eastern Australia has had five years of below average rainfall, and more than 90% of New South Wales, which contains Sydney, is said to be suffering from drought.According to official figures, eastern Australia has had five years of below average rainfall, and more than 90% of New South Wales, which contains Sydney, is said to be suffering from drought.
Reports said that farmers have abandoned crops in South Australia, Victoria, and New South Wales.Reports said that farmers have abandoned crops in South Australia, Victoria, and New South Wales.