Even assuming that rainfall returns towards average soon, the drought will continue to weigh on aggregate GDP during 2019. However, the effect of the drought on aggregate output and inflation is finite, though its impact on the people and businesses affected can last much longer. We are used to climate having a temporary effect (though sometimes severe) on output and prices in Australia.
This is due to the fact that prices and wages cannot adjust suitably and in a timely manner. Conversely, the speedier adjustments of wages and prices can take place in response to adverse changes in macroeconomic conditions, the lower will be the costs in terms of employment and output losses.