Canterbury's quake bill could reach $600m in short-term
The short-term cost of the Canterbury earthquake could be as high as $600 million, says Westpac's chief economist.Canterbury represented around 15 percent of national economic activity, Brendan O'Donovan said.The region stood to lose $600m in the short-te
The short-term cost of the Canterbury earthquake could be as high as $600 million, says Westpac's chief economist.
Canterbury represented around 15 percent of national economic activity, Brendan O'Donovan said.
The region stood to lose $600m in the short-term from disruption to business after the earthquake. This is equal to 2.1 percent of its gross domestic product, 0.3 percent of New Zealand's gross domestic product (GDP), he said.
Canterbury's capital invested in property had suffered a "substantial hit".
Damage totalling $4 billion included $2 billion to residential property, $1 billion for commercial and industrial property and another $1 billion for council and government infrastructure.
"There remains substantial uncertainty as to what the bill will ultimately be," said Mr O'Donovan.
However, he predicted an "enormous lift in activity" in the next two years as the region restored its property capital stock.
Regional GDP would lift as economic activity recovered and rebuilding began.
The earthquake would also have an inflationary impact, particularly on construction costs and rental accommodation, he said.
The "disaster" had happened during a lull in the construction industry, which meant construction costs shouldn't skyrocket, he said.
The Reserve Bank of New Zealand will treat the event as a one-off when considering inflation and look at the wider picture.
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