English said the disaster, which is believed to have claimed more than 240 lives, would have a major impact on an already-struggling economy, providing little prospect of growth in the 12 months to June this year.

"June-to-June could be close to zero growth," he told Radio New Zealand.

"It's a different outlook from what we expected six months ago but we'll just have to roll with the punches on it."

Economists estimate Christchurch, New Zealand's second largest city, accounts for about 15 percent of the country's economy and have predicted the damage bill from the quake could reach NZ$16 billion ($12 billion).

The damage is expected to create opportunities in construction. However English said the disaster would certainly hurt growth and refused to rule out a recession in the wake of last week's 6.3-magnitude quake.

"I simply don't know the answer to that," he said.

"We're going to have very low growth, whether you have a recession or not, whether it's called a recession is largely something decided by the statisticians."

New Zealand's farming-reliant economy shrank 0.2 percent in the August-September quarter after another 7.0 tremor rocked Christchurch, miraculously claiming no lives but weakening buildings that collapsed in last week's quake.

English said October-December growth figures, due out later this month, were also set to show the economy was "pretty flat".

"What I know is that people aren't rushing up their spending, retail and housing are pretty flat. When they're pretty flat you don't get a lot of strong growth in the economy," he said.

"Now we have the earthquake, which is going to knock the numbers around a bit."

If the October-December data shows a contraction, New Zealand will technically be in recession, with two consecutive quarters of negative growth.

With the first half of this year set to be hobbled by the latest quake, English said the Reserve Bank may lower interest rates to stimulate flagging activity.

Reserve Bank chief Alan Bollard has kept rates at 3.0 percent since July as New Zealand struggles to shake off the impact of a previous recession from early-2008 to mid-2009.

But economists have predicted the central banker, whose monetary policy decisions are made independently of government, will slash rates by 0.5 points when the bank meets on March 10.

"The market is telling that's what they think is going to happen," English said.

"The Reserve Bank governor, when he makes his decisions, he'll be taking into account not just the earthquake but the fact that economic growth has been a bit flatter than the Reserve Bank expected three or four months ago.

"That may well enforce this decision, but we'll see next week."

New Zealand's stock market closed 0.41 percent higher at 3,384.39 on tiny volumes.

Fletcher Building shares are up 5.30 percent since last week on expectations of increased construction work due to the quake. Engineers say a third of Christchurch's city centre faces demolition.

"The risk is that the market is underestimating the impact of this event on the economy, consumers and consumer sentiment," said Goldman Sachs broker Peter Sigley.

del.icio.us	Digg	Reddit
YahooMyWeb	Google	Facebook

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News