Helen Kevans, a senior economist at JPMorgan Chase & Co. in Sydney, made the following remarks about the economic impact of the earthquake that hit Christchurch on Sept. 4. She made the comments today in a telephone interview.
Next year “it could actually be positive for growth.
“You will probably see a massive lift to the construction sector, which has been dwindling in recent quarters.”
Recent evidence suggests “that the construction sector is really stalling.
“It’ll create tens of thousands of jobs, most of which will have to be sourced from outside of Christchurch. There will be a flood of immigration into the city” by construction workers.
“It should give a pretty big lift to household spending, and should have some knock-on effects throughout the economy.”
“If anything, the risk is skewed to higher prices for building materials, but that will be tamed in that Christchurch accounts for about 15 percent of gross domestic product.
“In terms of monetary policy, the Reserve Bank of New Zealand will be very wary of even thinking about raising the cash rate.”
On the bond market:
“The bond market reaction was muted.
“The government is estimating the damage is about NZ$2 billion. I expect it will be a little higher but we won’t know until all the aftershocks have happened.
“The government does have a natural disaster fund with about NZ$6 billion, so there won’t be too much pressure on government financing in the near term.”