ASB

• It will take some time to get a clear picture of the economic impact from the earthquake: it is still very early and the scale of the damage is large yet uncertain.
• The Canterbury economy will face a period of short-term disruption until the vast majority of businesses can resume more normal operations.  Overseas experiences suggest national GDP growth could be weak in Q3, instead of robust in the led-up to GST.
• However, reconstruction activity will subsequently boost GDP, potentially by 1.5 percentage points.  Some of this activity will cause pockets of inflation, but we expect the RBNZ will look through these impacts and if anything keep interest rate support in place for longer.

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