The Impact of the Earthquake in New Zealand - Case Study Example

Name: Professor: Institution: Course: Date: Introduction The latest earthquake of the Christchurch has been categorized to be a very devastating case when compared to the one that had taken place on September, 4 2010. Its Richter rating was 6.3 as compared to 7.1 of September, 4 2010, and this indicates that the latest quake was considered to be much closer to the earth surface. The analysis of the earthquake also showed that the resultant epicenter was much concentrated and closer to the main city of New Zealand. Being found to have a bigger hit is evident with the obvious effects on different buildings that have been destroyed, and also the terrible loss of life on most of the adjacent regions (Ebert, 2011). The Impact of the Earthquake in New Zealand It has been determined that most of the effects of this devastating earthquake were evident and with a higher intensity within the inner second biggest city of New Zealand. The impact of the earthquake was also felt on New Zealand’s infrastructure, and this has been taken to be far more prevalent and destructive, especially when comparing with the initial state of such infrastructure before the earthquake struck the Christchurch. Figure 2: Devastations in the suburbs The following are some of the most important things that were affected by the impact of the earthquake that struck Christchurch (Ebert, 2011): i. Water reticulation ii. Sewage systems iii. Gas lines iv. Electricity v. The Port of Lyttelton vi. Telecommunication networks Therefore with such kind of impact being experienced within the affected regions of New Zealand, there are a number of obvious safety measures and also health related issues that are supposed to be monitored over the a long period of time. Such wider blow to the existing infrastructure seemed to be related to the temperament of the latest quake that was also devastating. It appeared to be more concentrated on a lateral radiation of seismic force, and hence taken to be of a higher impact as compared to the comparatively up-and-down, or just cleaving, motion of the September’s earthquake (Ebert, 2011). Figure 5: Rebuilding Christchurch after the earthquake For the moment, there is need to initiate projects that are aimed at offering the required help is solving different issues as a resultant to the impact of the earthquake, and therefore; there is need to make sure that the available resources are focused on assisting individuals who are in the immediate need. Currently, it is an ongoing project with regard to the following items: i. General civil defense assistance, ii. Specialized search and rescue operation measures, iii. Hospital emergency services. Effect on the Monetary Rates Monetary conditions have started to alleviate in consideration with the dreadful scenes in Christchurch. While the OCR expectations have been flattened as different markets have opted not to support the existing speculation over the rate cut. The impact of this has been felt in the area of wholesale interest rates, which have been lowered along the curve, and this has resulted to a case of putting downward pressure on the existing retail rates. The effect has also been experienced with the currency value since the earthquake struck, as it has also decreased by about 1.5 per cent (McLaughlin, 2010). Impact on the Gross Domestic Product (GDP) An economic brief has been presented by the New Zealand Treasury outlining the exact impact of the Christchurch earthquake over the economy of New Zealand. At this early phase, the resultant economic impact and other related damage are estimated to be of a higher value, and the general Gross Domestic Product impact is projected to be lesser than the ultimate damage bill. The devastating unconstructive impact on the Gross Domestic Product within the September quarter is expected to be about 0.4 per cent. According to the stated brief, the overall recovery and repair work within the next three quarters is expected to counterbalance this effect and ultimately boost the Gross Domestic Product, and this is projected by June 2011 (McLaughlin, 2010). Figure 6: Property for sale searching (shows the displacement of people). The advance on the economic activity from the process of rebuilding within the stated period of time is dependant on the intensity and extends of the damage caused. The cost of the earthquake by the treasury is projected to go up to $4 billion, and this includes the amount of $2 billion for the estimated damage caused to the private dwellings and other stuff. It also consists of $1 billion worthy of damage caused to the commercial property, and about $1 billion of critical damage that had been caused to the public infrastructure. For the purpose of knowing the full cost of the damage caused by the earthquake, all claims made by the insurance are supposed to be lodged and critically assessed, so that the damage estimates should be done beyond the private dwellings, as it has been done by the Earthquake Commission (McLaughlin, 2010). Impact on Business Activity and Inflation The seen disruptions will almost certainly have a severe impact on the business activity and the spending of consumers. Also most of the construction projects that had been outlined for 2011 will largely be shifted to 2012, which will cause a bigger delay in the projected significant developments. On the case of inflation, nevertheless, all that is being assumed is more upside pressure and other related risks associated with the impact caused by the earthquake. Considering the analyzed data from a CPI path, it had already been assumed to be a huge issue for the Bank, especially at a national level, and this has indicated a wider potential for the fundamental inflation to be serious (Ebert, 2011). Unemployment Effect The Government of New Zealand has promised to start working towards the reduction of the inevitable increase in the registered unemployed individuals immediately the business owners and affected employees exhaust the available emergency package for funding. Most of the Companies have been positioned to claim a $500 as a week financial support for each full-time worker and about $300 for every part-time employee. About 87 percent of the applicants for subsidies have been approved, this representing of more than 28,000 individuals who had initially taken up job loss cover. Such revelation and effort by the government shows a serious impact of the earthquake on employment, as many individuals have lost their job opportunities (McLaughlin, 2010). The participation rate in New Zealand has gone down since the earthquake struck the city. The adult population constituting the total labor force in most of employment sectors that were affected decreased by 27 percent and this is a measure that considers individuals of 16 years of age and above (McLaughlin, 2010). Government Intervention The government of New Zealand has declared specific sustenance measures that are in the form of escalating the spending allowances on employee remuneration for the responsibilities ahead. Such initiative is considered to be quite expensive, but the best thing is that the project is still fundamentally funded by money received from insurance, and this is either from the public catastrophe fund, or even from private insurance, and both funding sources consist of global reinsurance components (Koubaridis, 2011). It is also indicated that the need for further direct funds from the government is on the higher rise, even though there can be nothing to oblige the tapping of the economy by the use of the taxes or the significant levies. The banking system, in the meantime, is making a contribution through direct assistance to its significant business and other retail customers. This includes having relevant things such as provisional overdraft facilities, and as well as waived fees, and direct donations. These are types of responses from the government and private sectors have been considered to be the best method of directly dealing with the relevant difficulties and for individuals that require assistance. Another suggested solution was to allow the Reserve Bank to cut down on the nation’s cash rate for the purpose of assisting other projects in offering a remedy to the current situation. This has been as one of the severe speculation from the global market. Basing everything on the any cool-headed reasoning, it is not rational to believe that the official cash rate (OCR) can be taken as a better tool in helping to solve the problem, despite the fact that such calls from major stakeholders are well comprehended. The Reserve Bank has been seen to be drawing the same decision, as it is working hard to ensure that the recovery is achieved as fast as possible. This is being achieved in terms of accessing to available financial services, and also by making sure that markets are stable. The Bank is already in a position to supply enough cash to the overall financial system, and it is through such readiness that the payment systems have been sustained and are in fully operational state (Gustafson, 2011). Conclusion Considering such nature of the earthquake origin, it is clearly indicated that the greater damage to the resultant buildings and other related infrastructure this time around is attributed to the differences shown in the impact. Another aspect that can be used to justify the impact of this earthquake is the greater prevalence of liquefaction, something that is found to be devastating especially when it is all about the overall potential disruption to be caused and the ultimate efforts of rebuilding over the caused damages. On the case of inflation, nevertheless, all that is being assumed is more upside pressure and other related risks associated with the impact caused by the earthquake. Considering the analyzed data from a CPI path, it had already been assumed to be a huge issue for the Bank, especially at a national level, and this has indicated a wider potential for the fundamental inflation to be serious. References Christchurch earthquake photos. Retrieved on April, 5th 2011 from: http://www.nzherald.co.nz/christchurch-earthquake-photos/news/headlines.cfm?c_id=1503036 Gustafson, R. (2011). Christchurch Earthquake Deployment. Retrieved on April, 5th 2011 from: http://blog.usaid.gov/2011/02/christchurch-earthquake-deployment/ McLaughlin, N. (2010). Christchurch Earthquake: Estimated Economic Impact. Retrieved on April, 5th 2011 from: http://www.theepochtimes.com/n2/content/view/42544/ Christchurch earthquake impact 'bigger than Katrina.' Retrieved on April, 5th 2011 from: http://www.stuff.co.nz/national/christchurch-earthquake/4710982/Sad-farewells-for-Christchurch-earthquake-victims Koubaridis, A. (2011). Christchurch earthquake: Impact tosses fish from tanks. Retrieved on April, 5th 2011 from: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10709834 Ebert, C. (2011). A more devastating earthquake. Retrieved on April, 5th 2011 from: http://www.businessspectator.com.au/bs.nsf/Article/New-Zealand-Christchurch-earthquake-economy-pd20110224-ECRM3?opendocument&src=rss Building boom 'will help economy.' Retrieved on April, 5th 2011 from: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10711441 Christchurch Earth Quake. Retrieved on April, 5th 2011 from: http://www.youtube.com/watch?v=opsiKirDfdE&feature=related Christchurch Earthquake’s Impact on Retailers. Retrieved on April, 5th 2011 from: http://retailexaminer.co.nz/2010/09/christchurch-earthquakes-impact-on-retailers/ Magnitude 6.1 – South Island of New Zealand. Retrieved on April, 5th 2011 from: http://earthquake.usgs.gov/earthquakes/eqinthenews/2011/usb0001igm/ Read More