The earthquake that struck Christchurch Feb. 22, killing more than 160 people and wrecking the central business district, is likely to cost as much as NZ$15 billion ($11 billion), New Zealand’s Treasury Department said.
The 6.3-magnitude earthquake will probably cost two to three times more than the estimated NZ$5 billion expense of a temblor that hit the city in September, documents on the Treasury Department’s website show. The bill will be shared between the government, insurers and businesses, the department said today.
Economic growth in New Zealand in 2011 is expected to be 1.5 percentage points lower because of the February disaster, according to the Treasury Department. Starting in 2012, the recovery will “bring a sizable boost” to investment, it said.
“Paying for the earthquake will likely involve a balanced combination of a bit more borrowing in the short term and reconsidering our spending priorities, so we can provide the financial resources needed to help rebuild,” Finance Minister Bill English said in a statement today on his website.
A “small contraction” in real gross domestic product is expected in the March quarter, compared with a forecast of 0.5 percent growth before the February quake, the Treasury said.
The number of deaths from the February quake rose to 166, the Civil Defense department said on its website today. Crews finished searching the rubble of the toppled Christchurch cathedral and didn’t find any victims, the statement said.
Hit by Aftershocks
Further aftershocks of magnitude 5 or more are possible in the next few days after a 4.8-magnitude shock reported today by the U.S. Geological Survey, the civil defense department said on its website. Residents and businesses were allowed access to some areas of Christchurch opened to the public today, the department said.
Police yesterday identified six more people killed, including a 24-year-old South Korean national. Previously the names of 20 victims, including two Israeli citizens and a Thai national, were released. As many as 100 foreigners may have died in the quake, according to the New Zealand government.
The IMF will likely reduce its economic growth forecast for New Zealand after the nation’s deadliest earthquake in 80 years, spokeswoman Caroline Atkinson said on March 3.
“The outlook for the New Zealand economy was weaker even before the earthquake, as domestic demand was soft despite income gains from high commodity prices,” the Treasury said.
The impact of the February quake, “combined with already slower economic growth than forecast,” may leave nominal gross domestic product NZ$15 billion lower through 2015, English said.
The total loss of tax revenue may be as much as NZ$5 billion over a five-year period, the finance minister said.
“This is manageable in the context of the government’s revenue base of about NZ$330 billion over the five years,” he said. “It’s clear that the earthquake will have an impact on the government’s finances -- through both increased costs and reduced tax revenue,” English said in his statement.