The month-long wildfires that have ravaged the northern Alberta town of Fort McMurray and temporarily shut down of the oil sands will make a dent in the nation’s economic growth says the Bank of Canada. In its scheduled May announcement the central bank said it expects the fire to shave a full 1.25% off GDP in the second quarter.
Previously, the BoC anticipated a full percentage point of growth. “The second quarter will be much weaker than predicted because of the devastating Alberta wildfires,” stated the Bank’s announcement. “The Bank’s preliminary assessment is that fire-related destruction and the associated halt to oil production will cut about 1 1/4 percentage points off real GDP growth in the second quarter.”
It’s anticipated this will rebound somewhat in the third quarter, as oil production resumes and rebuilding efforts begin on the Fort McMurray area.
The evacuation and shuttering of several oil sands projects will result in an estimated loss of 1.2 million barrels per day – a $985-million drag on Canada’s GDP.
The insurance and particularly reinsurance, industries are to be especially impacted by wildfire costs, as claims have poured in from the 100,000 displaced Fort McMurray residents for home, auto, loss of use, and provisional needs.
While early estimates from the Bank of Canada pegged total losses at $9 billion – a number that assumed total devastation, reports that some neighbourhoods had been spared have insurers readjusting their loss estimates. Access to the city has yet to be granted, but some insurers are offering an idea of their fire costs; so far, The Co-operators General has reported an after-tax cost between $70 million - $90 million.
Additional claims are expected to come in as the evacuation order is lifted.