Appendix 3: Adjusting the Forecasts for the Canterbury Earthquakes

The overall economic growth and resulting employment forecasts used in this report are broadly in line with the preliminary adjustments to GDP forecasts made by the Treasury in light of both the September Canterbury earthquake and the February aftershock.  These adjustments are based on the Treasury GDP growth forecasts published in December 2010 (2010 HYEFU) and are subsequently revised in the March 2011 Economic Indicators report.

The revisions made by the official agencies as a result of the earthquakes see the 5-year average GDP growth over the 2010-15 forecast period declining from about 2.8% to 2.5% per annum, with lower growth projected for the 2011 and 2012 (March) years, followed by slightly higher growth in subsequent years as recovery activity builds momentum.

A complete picture of the industry and occupation level impacts of the earthquake will only be available after all economic and employment data for the recently completed 2011 March year is fully incorporated into the Department’s model.  This will not be possible until mid-2012, when this data becomes available.

It should also be noted that more detailed ‘ground level’ analysis underway in Canterbury (such as the joint Department- Canterbury Development Corporation labour market modelling programme) will provide a stronger basis for considering the immediate negative and likely medium-term positive employment effects of the Canterbury earthquakes.