Earthquake Economic Losses May Exceed Snow Disaster To Lower Two Quarter GDP

Direct economic loss or snowstorm is the main cause of the economic growth.

So far, more than 30 thousand people have been killed and millions of people have been affected by the Wenchuan earthquake.

What impact will it have on China's economic growth, inflation and capital market operation?

What adjustments will be made to fiscal policy and monetary policy?

Many experts and scholars said that in addition to causing huge losses in life and property, the great earthquake also brought some uncertainties to China's economic growth.

Analysts believe that the direct economic losses caused by the earthquake will be much faster than the snow disaster at the beginning of the year, and may slow down the GDP growth rate in the two quarter.

According to experts, direct economic losses or excessive snow disaster: the major earthquake involved 18 cities and counties in Sichuan, and parts of Gansu, Shaanxi and Chongqing. The affected area exceeded 100 thousand square kilometers, and the direct disaster population reached about 10000000.

As of 14 hours in May 18th, the earthquake had caused 32477 deaths and 220109 injuries.

As of 17, 14 hours, the earthquake has caused 3 million 128 thousand houses collapsed, 15 million 609 thousand houses damaged.

In addition, infrastructure such as pportation, electricity, communications, water supply and gas supply in the affected areas were damaged and seriously damaged.

Merrill Lynch claims that the impact of the Wenchuan earthquake is smaller and the duration is shorter than that of the snowstorm.

This is also a common view of foreign investment banks.

However, domestic economists believe that due to casualties and serious damage to buildings, the direct economic losses caused by the Wenchuan earthquake will exceed the snowstorm.

Fan Jianping, chief economist of the national information center and director of the economic forecasting department, predicts that the earthquake will cause more losses to the people's property stock than the snow disaster, and the direct economic losses will be much greater.

Economist Liu Zhengshan initially estimated that the direct economic loss caused by the earthquake was about 525 billion 200 million yuan, far exceeding the 151 billion 650 million yuan loss caused by snowstorm in the beginning of the year.

In the two quarter, the GDP growth rate was affected by the "shock". According to experts, in 2007, the population of Sichuan was 81 million 700 thousand, accounting for 6.2% of the total population of the country. Sichuan's GDP was 1 trillion and 50 billion 530 million yuan, accounting for 4.3% of the total GDP in the country.

Zhu Jian Fang, chief macroeconomic analyst at CITIC Securities, estimates that the earthquake will cause local production interruption for about 1 months. Due to GDP in the disaster area, which accounts for about 50% of Sichuan's total and 2% of the whole country, the earthquake may drag down 0.3 percentage points of the national industrial production.

At the same time, due to casualties and property damage, consumption in the affected areas will drop by 30%, leading to a 0.6 percentage point decline in the national consumption growth rate.

Post disaster reconstruction will stimulate investment and push up the national investment growth by 0.3 percentage points or so. "Initially estimated that the Wenchuan earthquake will slow down the annual GDP growth by 0.2 percentage points."

The China Bank of China (BOC) estimates that the earthquake may reduce the growth rate of GDP by 0.4 to 0.7 percentage points in 2008.

Zhu Jianfang believes that although the natural disasters brought by the earthquake will bring a certain negative impact on the two quarter economic and corporate earnings growth, this effect is short-term.

In the three or four quarter, the economy will resume normal growth, and some areas may have a retaliatory rebound.

According to the report issued by China Merchants Securities, if we do not calculate the impact of loss of life and destruction of natural resources, the impact of earthquakes on China's economy will be very limited.

The earthquake epicenter Wenchuan county belongs to the mountain area. There are only a small number of factories and agricultural production. The output value accounts for only 0.3% of Sichuan's total. The total GDP accounts for 18% of the total earthquakes in Gansu, Shaanxi, Chongqing, Yunnan, Shanxi, Guizhou and Hubei, but the production is basically undamaged.

Fan Jianping believes that in the two quarter, Sichuan's consumption and service industries (mainly tourism) will be affected, which will bring negative impact on the growth of GDP nationwide.

But in the whole year, according to the broken window effect in economics, post disaster reconstruction will boost investment growth, but it may push up GDP growth nationwide.

In addition, although some local large enterprises are affected, overtime work in other areas can help offset this negative effect.

According to experts, the earthquake shock wave is still "fermented". Experts believe that in addition to affecting economic growth, the earthquake may also impact the national labor supply and macroeconomic regulation and control policies.

China Merchants Securities believes that heavy casualties may have an impact on regional labor supply.

In 2007, Sichuan went out to work 20 million 20 thousand people, ranking first in the country.

In view of the fact that the effective labor force in the disaster area is currently working outside the country, it may be short term reflux after the disaster to support reconstruction. The impact of the earthquake on the national labor supply needs to be further evaluated.

Because of the great earthquake, some investors expect that the macro-control policy will be relaxed.

The central bank's Chengdu branch also said recently that the local legal person financial institutions in Chengdu, Mianyang and other 6 cities with serious disasters will not raise the deposit reserve rate in May 20th.

State Securities believes that management will expand the credit line to meet the needs of reconstruction, just like dealing with snow disaster. This year the possibility of the expansion of bank credit will increase. However, some experts believe that although the investment for post disaster reconstruction will definitely increase, it is still the primary task of macro policy in the short term to curb inflation.