The Ya'an earthquake in southwest Sichuan Province may cause a direct economic loss of more than 10 billion yuan (US$1.6 billion), economists estimated yesterday, four days after the deadly natural disaster.

The quake may have a limited impact on China's overall economic growth, compared with the direct loss of 845 billion yuan caused by the devastating Wenchuan earthquake in 2008.

But homebuyers may feel a greater impact because home construction is set to be delayed as rescue efforts continue.

"We project the Ya'an earthquake will delay developers' construction progress, and hurt home buying sentiment, which will therefore hit developers' presales and earnings," said Wendy Luo, an economist at Barclays.

Luo said the government may demand developers suspend construction temporarily during relief work, which may lead to delays in getting housing projects in the province completed.

Chang Jian, another economist at Barclays, said the earthquake's overall economic impact should be limited, given that Ya'an is not a major manufacturing or service region.

But Chang said the government has been taking measures to stabilize growth by increasing spending on infrastructure investment.

On Saturday, a magnitude 7.0 quake struck the province. Ya'an, the epicenter, is less than 150 kilometers or two-hour drive from the provincial capital of Chengdu.

The Ya'an quake brought back memories of the 8.0 magnitude earthquake in Wenchuan County also in Sichuan, five years ago which claimed 69,227 lives.