Coronavirus: Extent of Covid's economic hit to the top of the south revealed

Thursday, 20 August 2020

Tourism was one of the worst-hit sectors in both Nelson and Marlborough due to the lockdown.

The top of the south’s economy has taken a battering from the Covid-19 lockdown, with major drops in both GDP and consumer spending.

Data from Infometrics for April-June has illustrated the extent of the decline, which Infometrics senior economist Brad Olsen said “represents the largest single hit to the New Zealand economy on record”.

In Nelson-Tasman there was an estimated GDP decline of 12.5 per cent compared to the June 2019 quarter, while in Marlborough there was a 14.9 per cent decline. The New Zealand average was 12.6 per cent.

Consumer spending also flatlined during lockdown, with the post-lockdown surge in June not enough to make up for the lack of spending in April and May.

* Economists 'might have to concede they overestimated negatives'

* Grim economic forecast for Nelson post-coronavirus

Nelson Regional Development Agency chief executive Mark Rawson said while the economic effects of Covid-19 was just starting to be felt – there was some room for “cautious optimism”.

Spending in Nelson-Tasman lifted from $51 million in April to $112m in June, but still resulted in an overall decline in spending for the June 2020 quarter of 18.2 per cent.

The corresponding figures for Marlborough showed a jump from $24m to $51m, and an overall decline for the quarter of 20.8 per cent.

Infometrics senior economist Alistair Schorn said across the top of the south, the worst-affected sectors such as tourism had been offset to a degree by the resilience of food-based agricultural production.

Marlborough’s grape harvest was able to go ahead, but due to the longer production process for wine its benefits would not be felt immediately on the economy.

Schorn said the economic benefits of Nelson’s agricultural sector may have shown a more immediate impact than Marlborough.

He said while Marlborough’s grape harvest was able to go ahead, due to the longer production process for wine those benefits would not be felt immediately.

Nelson Regional Development Agency chief executive Mark Rawson said while there was some “cautious optimism” from businesses in the early stages of recovery – it was likely the region was only just beginning to feel the economic effects from the pandemic.

Rawson said for obvious reasons tourism, hospitality and retail had been worst affected, with sectors like tourism having to take time to adapt their products from international to domestic visitors.

He said while the Government’s wage subsidy and cashflow lending schemes had softened the economic blow, he was realistic about the longevity of any sort of bounce-back.

“People are starting to adjust to a new normal – there’s a bit more of an attitude of people understanding this is here for the foreseeable future.

“I feel like getting used to working with that level of ambiguity is going to become such a norm over the next couple of years … that challenges a lot of traditional approaches to business.”

Marlborough District Councillor Mark Peters said the Infometrics figures “were largely expected” in the wake of the lockdown, with The Economic Action Marlborough (TEAM) identifying in May that Covid-19 would have a significant impact on Marlborough’s hospitality, retail and tourism sectors, and on younger employees in particular.

Schorn said while schemes like the wage subsidy had kept unemployment figures down in the short term, the sharp increase in jobseeker numbers showed the economic “reality on the ground”.

In Nelson-Tasman the amount of individuals on Jobseeker Support and Covid Income Relief Payment recipients had risen by 47 per cent (about 1250 people) from 1 March to 1 June.

Marlborough had experienced a similar increase of 49 per cent (close to 500 individuals) over the same period.

“We don't know what’s going to happen with the end of the wage subsidy.

“The support measures the Government have put in place do delay the job losses quite a bit, hence why we expect the unemployment rate to peak sometime after June next year.”