Monday, September 13, 2010
WELLINGTON, Sept 13 - The earthquake which caused substantial damage to New Zealand's second-biggest city, Christchurch, will provide an economic boost in 2011 and 2012 outweighing the initial negative impact, according to a Treasury report released on Monday. The Treasury's initial estimate is that the rebuilding work will cost around NZ$4 billion and said the inflationary impact of this is likely to be minimal. The magnitude 7.1 quake struck at 4.35 a.m. local time on Sept 4, and was the most destructive in the quake-prone country since 1931.
There were no deaths and only a few serious injuries in the city of 350,000, but there was widespread destruction to infrastructure and buildings. About two thirds of houses in Christhurch and surrounding district are believed to have been damaged, with hundreds likely to be demolished.
It said the earthquake will shave somewhere between 0.2 percent and 0.8 percent from gross domestic product in the September quarter, with about 0.4 percent the best estimate. 'Despite the negative impact on GDP, we still expect GDP growth in the September quarter to remain positive,' it said.
The subsequent boost from rebuilding work will occur mostly in the year to June 2011 and June 2012, adding 0.5 percent and 0.3 in each year respectively. The NZ$4 billion cost is split between NZ$2 billion to personal dwellings and contents, NZ$1 billion to commercial property and NZ$1 billion to infrastructure.
It said thre would probably be a small upward boost to inflation because of increased pressure on resources, but it had not quantified the impact.
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