Economic fallout of Fort McMurray wildfire could be big, if history is any guide

, Investment

Fort McMurray’s raging inferno is shaping up to be worse than the Slave Lake fire of 2011, one of the most costliest natural disaster in Canada’s history.

From floods to wildfires to ice storms, natural disasters have a history of large-scale economic fallout in Canada.

The latest disaster economists are watching unfold is the raging wildfire near Fort McMurray, which has forced the evacuation of the entire city and has led oil giant Shell to shut down one of its operations. 

Economists say it is too early to tell just how much the fire could hurt the economy, but looking at past natural disasters can give some scope.

Robert Kavcic, senior economist at BMO Capital Markets, notes that the 2011 Slave Lake wildfire caused gross domestic product to drop five per cent in the oil and gas sector, while pulling the overall economy down in the month. There was a minor impact in second quarter GDP, but a strong rebound followed in the third quarter.

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