Last Friday, the government released its report on the economic impact of the 2016 Kaikoura earthquake. The report which was commissioned by the Ministries of Transport and of Business Innovation and Employment, looks at the lingering effects of the fatal 7.8 magnitude earthquake which struck the South Island shortly after midnight on 14 November 2016.
Both the direct and indirect costs to the economy and estimates of the repair and reconstruction workforce requirements for quick and slow rates of rebuild are presented in the report. In total the estimated loss to the New Zealand economy over two years for the ‘quick rebuild’ is $465 million or an extra $48 million for a four year ‘slow rebuild’. This represents a 0.12 to 0.14 per cent reduction in GDP. In terms of the government’s likely infrastructure replacement costs, the report reaffirms Treasury’s earlier estimates of around $2-3 billion based on the Canterbury earthquake series. Workforce requirements are tabled in the report and highly variable depending on availability of construction workers and the rate of rebuild (see tables 4.14-4.16).
The most significant contributions to the total impact on GDP over 2 years is attributed to transportation cost increases as NZ consumers can afford to spend less on other goods, and goods produced in NZ become less competitive with overseas goods as well as losses to business operability from disruptions in infrastructure and other factors.
The Government will use this report to inform the rebuild and support programmes to invest in impacted infrastructure.