The effects of last week’s flooding in downtown Calgary continue to dog the city’s financial community, but economists estimate that the forthcoming rebuilding effort may provide a boost to provincial GDP.

On the upside, clearing firm, CDS Clearing and Depository Services Inc., announced that its Calgary office reopened today, June 26, and that all of its normal functions have resumed. Yet, the offices of the Alberta Securities Commission (ASC) in Centennial Place remain closed. And, the Investment Industry Regulatory Organization of Canada (IIROC) says that its Calgary office will remain closed for the rest of the week due to the flooding situation.

“The safety and security of our employees is our primary focus at this time,” IIROC says, adding that it has implemented its business continuity plan “to ensure investors and IIROC dealer members and firms in Calgary are not impacted by the office closure.”

In the meantime, registration filings through the National Registration Database that are normally dealt with by IIROC’s Calgary office have been temporarily redirected to its Vancouver office, it says.

In a report on the flooding published today, TD Economics says that these sorts of natural disasters tend to share the same pattern of disrupting economic activity in the short term, but that these losses are quickly recouped. “And, somewhat paradoxically, the significant rebuilding that follows often provides a net boost to economic growth partly reflecting the way gross domestic product (GDP) is calculated,” it says.

While TD says it’s too early to pinpoint the exact hit to economic activity in June, it estimates that the disruptions subtracted roughly $500 million–$1.5 billion in economic activity in June, between 0.2%–0.5% of Alberta real GDP and 0.03%–0.09% of Canadian real GDP. Yet, the economy is expected to bounce back strongly beginning in July.

Additionally, TD says that early estimates put the damage to assets at around $3 billion-$5 billion (1.0%–1.7% of Alberta GDP), of which as much as 25% could be uninsured. “We assume that the lion’s share of this lost asset base will be replaced, with the work effort beginning in the second half of 2013,” it says, noting that damages to physical assets do not have a direct negative effect on GDP, but the reconstruction process that follows does provide a boost to GDP.

And, the damage estimates may not include labour costs, which could mean more stimulus spending than implied by the loss estimates alone. Given the already-tight labour markets in Alberta, a surge in hiring in the construction sector could lead to timing delays and drive up labour costs, TD says, boosting inflation too.

“While not all of the losses in service sector activity are likely to be fully made up, we anticipate that any losses are likely to be offset this year by reconstruction activity and public spending. As such, we would be inclined to revise up our 2013 real GDP growth forecast to nearly 3%, compared to our April estimate of 2.5%,” TD says. And, for 2014, it sees GDP growth in the range of 3.5-3.7%, up from its previous forecast for next year of 3.3%.

The provincial government’s finances may take a hit due to added spending on the clean up effort, but TD says that Alberta “continues to enjoy one of the strongest fiscal positions among the provincial governments, so financial markets are unlikely to be phased by any moderate deterioration in the budget position.”