Typically, it takes output twice as long to return to its pre-recession level after a financial crisis than in a normal recovery, and output is permanently lower compared with its pre-crisis growth trajectory.
The upward pressure on construction costs that we are currently seeing in Canterbury may well extend more broadly across the industry. On a moderate scale, this would help to attract resources into the construction industry and hence facilitate the building expansion. On an excessive scale, this would risk spilling over into general inflation and put upward pressure on interest rates and the exchange rate.