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Smoke rises from a burned-out area south of Fort McMurray on Monday. The blaze at the centre of Canada’s oil sands region started on May 1 and has since reduced a little more than 1 million bpd from producers and pipeline operators that have shut facilities.

CHRIS WATTIE/AFP/Getty Images

The Conference Board of Canada says the economic hit created by the Fort McMurray wildfires will largely be offset by the rebuilding activity that will happen later in the year.

In a paper released Tuesday, the board estimates that Alberta's Gross Domestic Product will take a 1-per-cent hit during the second quarter of the year because of the fires. However the rebuilding activity that will follow is expected to create a similar amount of growth in the third quarter.

"As residents return to Fort Mac in the coming weeks, oil sands production gets back to normal, relief efforts continue, and the rebuilding gets underway, we expect activity to pick up to the point that the impact of the wildfires on overall GDP in Alberta for 2016 as a whole will be only slightly negative," states the report, authored by Pedro Antunes and Marie-Christine Bernard. At a national level, the board says the impacts will be hardly noticeable.

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Even though the authors conclude the economic impact of the fires will be limited in terms of GDP, they note that it will likely have longer term implications for government debt and the insurance sector.

"The true cost of this tragedy is its effects on people's lives – the loss of personal items and homes – and livelihoods," the report states. "The funds put toward replacing lost capital will leave the provincial and federal governments with more debt and the insurance industry with the challenge of absorbing what will most likely prove to be the costliest natural disaster in Canadian history."

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