As rescuers search destroyed building for survivors of the Chinese earthquake in Sichuan, experts are trying to work out what effect it will have on the country’s economy. US investment banks Merrill Lynch and Goldman Sachs say the quake should not have as much of an impact as the huge snow and ice storms that hit much of the country during the winter.
Sichuan is not a major economic centre. It accounts for 4.3% of China’s GDP and 0.6% of the country’s exports. The region’s economy grew by 14.5% in the first quarter compared with the same period last year – that’s faster than the national average – and direct economic losses there are forecast to be around 6.5 billion euros.
Transport, power, water and gas supplies have been disrupted and as up to 20 million people from Sichuan work as migrant labourers elsewhere in China there could be an impact on the overall economy as some of them return home to help with reconstruction there.
However, that reconstruction work is likely to stimulate investment and compensate for damage done to the economy from closed factories and lost jobs.
In terms of industrial production, the Beijing government says more than 14,000 businesses in the Sichuan area have been damaged and because of the heavy casualties it is predicted that consumption in the province will fall by as much as a third.