Devastating bushfire season will cost Australian economy $20BILLION, experts ...

Australia's worst bushfire on record is likely wipe $20billion from the economy - sparking a possible recession and threatening the fragile budget surplus.

The destruction of 7million hectares of bushland isn't just killing more than a billion animals and upending lives.

It is also costing the national hip pocket, with the Insurance Council of Australia putting the bushfire damage bill at $700million.

So far, 8,985 insurance claims so far filed in New South Wales, Victoria, Queensland and South Australia but that tally is set to balloon.

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Australia's worst bushfire on record is likely wipe $20billion from the economy - sparking a possible recession and threatening the budget surplus (pictured is Lake Conjola on the New South Wales South Coast)

 Australia's worst bushfire on record is likely wipe $20billion from the economy - sparking a possible recession and threatening the budget surplus (pictured is Lake Conjola on the New South Wales South Coast)

AMP Capital chief economist Shane Oliver said a one percentage point decline in Australia's gross domestic product would be enough to wipe $20billion from the economy. Then there's another $20billion in lost wealth

AMP Capital chief economist Shane Oliver said a one percentage point decline in Australia's gross domestic product would be enough to wipe $20billion from the economy. Then there's another $20billion in lost wealth

Even before the onset of blazes in September, the Australian economy was already weak, growing at a subdued annual pace of 1.7 per cent. 

That is set to worsen, with the natural disaster hitting agricultural and tourism businesses.

AMP Capital chief economist Shane Oliver said a one percentage point decline in Australia's gross domestic product would be enough to wipe $20billion from the economy.

Then there's another $20billion in lost wealth. 

'There's all the damage that's been caused to agriculture, property, livestock, factories, plantations, cars, all those sorts of things,' he told Daily Mail Australia on Wednesday.

Dr Oliver said there was a risk the Australian economy would fall into a recession by the March quarter of this year - something that hasn't happened since 1991. 

'There is a significant risk of recession,' he said, regarding it as a one-in-three chance.

Dr Oliver said there was a risk the Australian economy would fall into a recession by the March quarter of this year - something that hasn't happened since 1991 as bushfires hit the economy. The apple growing sector has suffered with fires destroying orchards at Batlow in southern NSW (stock image)

Dr Oliver said there was a risk the Australian economy would fall into a recession by the March quarter of this year - something that hasn't happened since 1991 as bushfires hit the economy. The apple growing sector has suffered with fires destroying orchards at Batlow in southern NSW (stock image)

Treasury last month reduced the projected budget surplus for this financial year from $7.1billion to $5billion.

Prime Minister Scott Morrison this week announced the government would spend $2billion, including $500million in 2019/20, on rebuilding infrastracture in bushfire-ravaged communities.

That would reduce the projected surplus to $4.5billion. 

Should the bill climb to a higher level than anticipated, the government's promise of delivering the first surplus since 2007

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