Christchurch Recovery May Buoy N.Z. Economy Over Next Year, English Says

New Zealand’s economy may be boosted next year by spending on reconstruction after a magnitude 7.0 earthquake damaged the city of Christchurch, Finance Minister Bill English said.

“Treasury has advised the earthquake is likely to lower gross domestic product growth over the next two or three months,” English said in response to a question in parliament today. “However, they would expect in the 12 months beyond that, that the earthquake will have a net benefit on GDP.”

English confirmed that “very early estimates” of the damage caused by the earthquake, which struck the largest city on the nation’s South Island early Sept. 4, are about NZ$4 billion ($2.9 billion). The region continues to be buffeted by aftershocks and water and power are still out in some areas, Christchurch city council says.

The bill incorporates damage to residential buildings and property largely covered by the Earthquake Commission, the government’s disaster insurer, English said. It also includes damage to commercial buildings largely covered by private insurers, the damage to local government infrastructure, some of which will be covered by private insurance, and costs and damage to central government assets.

English will visit affected areas later today, and will speak to a meeting of farmers in Darfield, near the center of the first temblor, New Zealand’s worst in 80 years,

“Businesses and employees face a loss of potential income because of damage to stocks or because the workplace is closed,” he said today. That’s why the government has initially set aside NZ$15 million for a wage subsidy program to help keep businesses employing 20 or fewer people on their feet, he said.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

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