Nearly six years after twin earthquakes flattened New Zealand's third largest city of Christchurch, many downtown shops and banks are still being housed in shipping containers in a sign of the slow rebuild that has policymakers, investors and locals frustrated.
And the lack of a permanent stadium in the South Island's rugby heartland of Canterbury highlights how the city's redevelopment has been mired in a combination of red tape, protracted insurance payouts and a shortage of skilled workers.
That has posed a challenge for the Reserve Bank of New Zealand (RBNZ), which had counted on the unprecedented NZ$40 billion rebuild of the city of 350,000 to provide a boost to inflation and growth.
While the economy has sped up, thanks to strong tourism and migration, inflation has remained anaemic, forcing the central bank to slash its policy rate to a record-low 2.0 percent even as cheap credit has stoked a red-hot housing market and heightened financial stability risks.
In the immediate aftermath of the 2010-2011 earthquakes, policy makers had expected the restoration to be largely completed by 2018. Now, that timeline has moved beyond 2020 - meaning inflation from the construction phase will remain more subdued than initially anticipated.
"We anticipated there would be much more construction cost inflation coming out of Christchurch and because there were so many spare resources around the country, that never materialised," John McDermott, deputy governor of the RBNZ, told Reuters recently.
"Christchurch is probably no longer adding to the macro growth story," he said.
New Zealand's low inflation is a global curse, as falling commodity and oil prices have fuelled deflationary pressures around the world. But a recent bounce in commodities has failed to flow through to higher inflation as a strong NZ dollar has crimped import costs.
Annual inflation was at 0.2 percent in the third quarter, well under the RBNZ's medium-term target of 1-3 percent, keeping policy makers primed for more rate cuts to boost prices.
With Christchurch not delivering on demand-led inflation, the central bank has been forced into a tricky balancing act between the need to boost inflation and temper a booming property market.
RED TAPE, CARDBOARD CATHEDRALS Many of the boutique fashion stores, coffee shops and bank branches in downtown Christchurch are clustered in a 'mall' of shipping containers. The city's Victorian stone cathedral lies in ruins while the Anglican Church uses a cathedral made of cardboard.
The dominant provincial rugby team, the Crusaders, a feeder of star players to the iconic All Blacks national squad, has had to play in a temporary stadium with stands made out of scaffoldings.
"A disaster of this scale is unprecedented in New Zealand's history and it was always acknowledged that rebuilding Christchurch would take years," Gerry Brownlee, Minister for the city's redevelopment, said in an email response to Reuters.
The central bank says slow insurance payouts have tied up funds and caused the rebuild to lag.
And a shortage of construction workers has meant "the local labour force is stretched," said Mark Adamson, CEO of Fletcher Building, the country's largest construction company.
Many complain that the management of the rebuild has also been bedevilled by red tape, frustrating international investors.
Raf Manji, a Christchurch City Council councillor, conceded that multiple decision makers at both the council and government level have caused confusion.
"It's a lot more frustrating than it needs to be," Manji said.
Many overseas companies, including Chinese firms such as China State Construction Engineering Corporation and state-owned infrastructure investment fund Guoxin International, have had to scale back their early ambitious plans.
Guoxin, for instance, launched a highly publicised redevelopment fund of up to $2 billion in 2015 but red tape and project delays have stymied its plans, according to city council and Chinese embassy officials. Guoxin did not respond to requests to comment.
"At first they were full of confidence," said Zhang Fan, the economic and commercial counsellor at the Chinese Embassy to New Zealand, referring to the large Chinese investors.
"At the end of the day they were frustrated. They were asking 'who is the decision maker behind this whole process?'" he said.
"They want a clear roadmap."
To read reuters' full disclaimer click here