Wider earthquake impact to be limited
While the latest earthquake is regarded as one of the largest to hit New Zealand in decades, the timing and location has economists predicting the disruption may be limited.
Although Wellington’s central business district was effectively closed on Monday, the most severe impact appears to be in sparsely populated areas.
In the days following the devastating 2011 Christchurch earthquake the Reserve Bank slashed interest rates by 50 basis points, to fend off the threat of falling confidence, as the human toll and tens of billions of dollars worth of damage emerged.
But on Monday morning economists indicated they did not see the same impact this time.
‘‘While the earthquake was severe, the location suggests a limited economic impact,’’ ASB chief economist Nick Tuffley said.
‘‘Several provincial towns have been hit hard, but to date only moderate damage has been reported in New Zealand’s major urban centres. However, it is too soon to say without further information on the extent of damage and disruption, particularly around infrastructure.’’
The earthquake occurred when financial markets were close, but when currency trading opened at 7am, the impact on the New Zealand dollar appeared limited.
The kiwi closed at US71.1 cents on Friday evening, and dropped around US0.4c when the market opened, before recovering slightly, according to information from Westpac.
Westpac currency strategist Imre Speizer said at this stage the earthquake was not of the same scale as Christchurch 2011.
‘‘That will be foremost in the markets’ mind, what is the extent of the damage?,’’ Speizer said.