The 7.5 earthquake which hit North Canterbury last night has caused damage in a number of towns and cities, as well as to transport infrastructure around the country.

Following the devastating February 2011 Canterbury earthquake, the Reserve Bank cut the OCR by 50 basis points.

The damage and destruction caused by that earthquake was immediately obvious.

However, this time round, the consensus from economists is that it is too early to tell what the economic impacts of the quake might be.

ASB senior economist Jane Turner said that while the quake was severe it is likely to have only modest economist impacts because of the location of the damage.

While some provincial towns have been hard hit, only moderate damage has been reported in major urban centres to date.

Further information on the extent of damage and disruption, particularly around infrastructure, is needed, she said.

“Short-term economic disruption is likely to be offset by the demand for replacement and repair – as occurred following the 2013 Seddon earthquakes.

“The resulting damage from the earthquakes will boost construction demand over the coming year, at a time when construction capacity is already stretched. 

“We expect this will result in even stronger construction inflation.”

To this end, the OCR staying on hold at 1.75% remains ASB’s base case, Turner said.

“But, at the margin, this morning’s earthquakes could increase the odds of another rate cut next year if economic disruption causes a fall in confidence.”

Westpac acting chief economist Michael Gordon also pointed to the Seddon earthquakes as a possible comparison.

Those earthquakes caused severe damage within the region and, like last night’s quake, also resulted in damage and disruptions in Wellington, he said.

“Last night’s quake was also centred in a relatively lightly populated area, and along with high levels of private and government insurance, this suggests that the economic and financial impacts will be manageable.”

At this stage, it is difficult to judge the full scale of the impact, especially as the risk of damaging aftershocks will remain high for several months, Gordon said,

ANZ chief economist Cameron Bagrie said two points to make are, one, that solid economic momentum going into the event should provide some resilience.

Also, with the fiscal accounts in improved shape, there is plenty of leeway for the government to support any rebuild effort, he said.

“Even so, the NZD opened under downward pressure, and while it has subsequently bounced off support, we suspect markets will trade ultra-cautiously until greater clarity on the extent of damage is available.”