Japanese earthquake another blow for NZ economy

Monday 14th March 2011

Japan's earthquake and tsunami will strike a blow to the New Zealand economy which is grappling with the consequences of the earthquakes in Christchurch, economists say.

New Zealand had understandably strong sympathies with Japan and the devastating natural disaster it was suffering from after the magnitude nine earthquake on Friday and tsunami, bank economists said today.

Bank of New Zealand said economic ties were strong between the two countries. Japan was New Zealand's fourth biggest trading partner and was also a key source of tourists to New Zealand.

Around 8% of New Zealand's exports, by value, go to Japan. Of this, nearly one-fifth is unwrought aluminium, no doubt from the Tiwai Point smelter, BNZ said.

Roughly half of New Zealand's imports from Japan are in the form of vehicles, with mechanical and electrical machinery and equipment making up the bulk of the rest.

The student tourist market would also suffer, as Japanese students were prominent in this market. However, the student tourist market had already been hurt by the Christchurch earthquakes.

"Economic implications for the Chinese economy are worth thinking about, given its increased integration with the Japanese economy over recent decades," BNZ said.

ASB noted Japan's importance to New Zealand as a trading partner but said key economic sectors in Japan had escaped relatively unscathed so far. The current risks to Japan's economy largely stemmed from the risk of nuclear meltdown and disruption to the electricity supply.

"For now, we anticipate the disruption to New Zealand exports is likely to be limited. Looking ahead, forestry is New Zealand's second largest merchandise export to Japan, leaving New Zealand well placed when reconstruction efforts eventually begin," he said.

NZPA

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