The massive earthquake in southwest China is expected to bring down the nation's soaring economic growth in 2008 by at least 0.2 percentage points, state media said today.
The May 12 earthquake will lead to a one-month production stoppage and curb consumption in worst-hit Sichuan and some neighbouring areas, the China Securities Journal reported, citing domestic economists.
But the impact is likely to be short-lived and the quake could eventually boost investment, a major driver of China's economic growth, through reconstruction efforts, it added.
China's economy, the world's fourth-largest, grew 10.6% in the first quarter from a year earlier after expanding by 11.4% in 2007, the fifth consecutive year of double-digit economic growth.
The financial daily said the economy would return to normal growth in the third and fourth quarters.
A preliminary investigation has shown that industry in Sichuan suffered a loss of 67 billion yuan ($9.6 billion) from the earthquake, China's vice industry minister, Xi Guohua, said today.
The economic losses caused by the quake will be 'much larger' than the fierce snowstorms that hit China in January and February, the financial daily said, citing Fan Jianping, economist with the State Information Centre, a government think tank.
The confirmed death toll from the quake disaster rose past 34,000 today, the government said, although it had earlier said the final toll could top 50,000.
In 2007, the gross domestic product of Sichuan was 1.05 trillion yuan ($150.1 billion), accounting for about 4.3% of the country's economy, official figures showed.
Economists note that the financial impact of the disaster would have been much more severe had the earthquake struck the bustling eastern coastal regions, the manufacturing base for China's lucrative exports.
But even though the overall impact on growth is seen as limited, the earthquake in the heavily agricultural region may prolong a spike in inflation, a key concern for China which has been tightening monetary policy.
The annual growth of the consumer price index rebounded to 8.5% in April, after hitting a near 12-year high of 8.7% in February.