Poverty reduces quake's financial impact

[FT_news]

As the official death toll from the Sichuan earthquake hit 40,075 last night, and hopes of finding more survivors faded, Chinese companies began counting the economic costs.

Despite the huge loss of life, economists expect the overall impact on the economy to be relatively small, in large part because the stricken area is one of the nation’s poorest.

More than 20 listed companies have issued loss estimates. The Agricultural Bank of China (ABC), the nation’s largest rural lender, predicts that its bad loans will rise by at least $850m (€543m, £432m) as a result of the quake – a sizeable blow to the worst-performing of China’s four biggest banks.

Preliminary government estimates put total business losses at more than $9.5bn, with more than 14,000 businesses affected and damage to private property expected to be much higher.

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