February’s earthquake certainly didn’t do any favors for New Zealand’s economy. The country’s central bank “sliced half a percentage point of its benchmark interest rate in an effort to limit the short term economic impact” of Christchurch’s quake. Reconstruction costs have been estimated at $11 billion, with a prediction that economic growth will be stunted by around 1.5 percent, at least in the short-term. This has to negatively impact the economy, especially in Christchurch where the earthquake took place, which will no doubt stop people calling it the “unspoiled paradise,” at least for now.
Business Confidence Drops Throughout the Region
Of course confidence in business in New Zealand will drop for now. That’s to be expected. But the strength of the country will mean that in time Christchurch will bounce back. Just as the economy was improving during the second half of 2010, figures for 2011 aren’t looking as good, due to the earthquake. In addition, Citigroup Sydney-based analyst Josh Williamson predicted NZ’s economy is at risk of “contracting in the three months ending March.”
So while things are looking a little tough right now for New Zealand, the strength and prosperity the country has built up over the years – which is especially the case in Christchurch’s “unspoiled paradise” will undoubtedly stand it in good stead for its potential economic recovery that will hopefully take place in the near future.
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