Australian Prime Minister Mr. John Howard has warned that the worsening drought situation in Australia could affect its GDP. Australia is currently witnessing one of the worst droughts in its history. A warning issued by Australian officials earlier this week, said that the countryâ€™s wheat production could fall by 50% this year and this warning lead to a sudden increase in global wheat prices, which are at a 10 â€“year high, right now.
Australian economic growth fell by 1.9% in the second quarter, but economists expect the economy to recover in the third quarter. Mr. Howard said that the actual impact of the current drought on the Australian economy remained to be seen. Earlier, the Australian Crop Forecasters had cut the wheat production estimates for 2006-2007, from 25 million tonnes to 11.5 million tonnes.