The Reserve Bank of New Zealand has published a research paper estimating that the potential economic impact from the Swine Flu would be less than 0.6% of GDP, which is significantly less than the 1-2% hit forecast by Westpac last month.

Here is the full release below the jump.

The Reserve Bank today released a paper on the potential impact of influenza A (H1N1) (Swine 'Flu) on the New Zealand economy.

Reserve Bank Assistant Governor John McDermott said:  "We appreciate there is a real human cost to influenza, as this strain is already unfortunately demonstrating.  Given the relatively high rate of contagion of this strain, we considered it appropriate to model the possible impact on the economy
from a pandemic."

Dr McDermott said the Bank's baseline result suggests that the economic impact of influenza A (H1N1) is likely to be low with declines in output of less than 0.6 percent in the first year. These baseline numbers are smaller than some reported recently in the markets, and smaller than the historical experience of Hong Kong with SARS and the US economy with the 1918 episode, for example.

"The baseline numbers are based on Ministry of Health assumptions. We also modelled other more extreme scenarios which we note are extremely unlikely to occur since they are predicated on much more aggressive strains of influenza."