Christchurch growth has hit peak: Westpac

Construction workers on the corner of Manchester and Lichfield streets in central Christchurch. File photo/ Simon Baker

Though most of the post-earthquake reconstruction work in Canterbury remains to be done, the rebuild's positive contribution to economic growth has just about peaked, Westpac economists believe.

The rebuild has represented a large, if tragic, boost to demand, equivalent to nearly a fifth of a year's output for the New Zealand economy.

More than four years after the largest quake, Westpac economist Satish Ranchhod says 60 per cent of the planned spending still lies ahead.

When it comes to the impact on gross domestic product growth it is the change in the level of activity, not the level itself, that counts.

Since 2011, increases in the amount of reconstruction work each quarter provided a boost to GDP and employment, reaching beyond the Canterbury construction sector to manufacturers of building materials, architects and so on.

"We expect that rebuild-related construction activity will continue around current strong levels over the next year or so, before it starts to gradually wind down from about mid-2016," Ranchhod said.

"By that point, the majority of residential reconstruction and infrastructure repairs will be complete, and non-residential reconstruction will also be well advanced."

The eventual slowdown in rebuild spending will pull down nationwide GDP growth, he said.

"This is likely to pass through to softer employment and spending in the economy through the latter part of the decade."

But the increased demand associated with the rebuild had pulled in resources from elsewhere in the economy, crowding out activity which would have otherwise occurred and reducing the scope for interest rate cuts.