Omicron causes economic confidence slump in Nelson

Wednesday, 26 January 2022

Shoppers are being urged to keep venturing out to support struggling businesses in the Nelson region. File photo.

Economic confidence has slumped in the Nelson region, largely blamed on the threat of the Omicron variant of Covid-19, according to a new report.

Smaller businesses in the region, already hit hard by the pandemic, are bracing for a further knock in trade if the virus takes hold.

The Nelson, Marlborough and West Coast regions dropped 12 points during the December quarter in the Westpac McDermott Miller survey of households, with economic confidence drifting into negative territory to -4 points on its index.

Westpac acting chief economist Michael Gordon said Omicron was impacting on economic confidence in the area.

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“Omicron’s threat will have accounted for a large part of the slump in confidence, particularly for tourism-dependent regions like the West Coast,” Gordon said. “Indeed, with the border still closed indefinitely, there is little light at the end of the tunnel for tourism businesses across the region.”

However, he said the area’s primary industries were “generally faring well”.

“This aspect of the region’s economic prospects bodes well for a rebound in confidence at some point during the year,” said Gordon.

While Omicron was the immediate issue affecting economic confidence, regions such as Nelson had strong primary industries to help carry them through. Among other factors, access to export markets had been well maintained during Covid, so primary industries had remained “steady performers”, Gordon said.

Nelson Tasman Chamber of Commerce chief executive Ali Boswijk encourages people to support struggling businesses.

“Looking at overseas it (Omicron) comes in a nasty but sharp wave and we’d probably play out similarly here,” he said. “The whole country is likely to be facing a fairly hairy period when case numbers are at their peak.

“The outlook for primary producers has been pretty solid through Covid and should remain so.”

Nelson Tasman Chamber of Commerce chief executive Ali Boswijk agreed with the survey’s findings. She said as soon as the Nelson region went into the orange setting in the Covid protection framework there was a noticeable decline in consumer spending, with hospitality, retail and tourism particularly affected.

Omicron hitting now – with cases of the virus in Nelson-Tasman – was another blow, and a lot of businesses hadn’t had enough time to trade fully in a brief buoyant period this summer to give them an earnings reserve, she said.

“We haven’t even begun summer and it’s already going to be over,” Boswijk said.

Staff at the Covid-19 Motueka testing site on Sunday, after Omicron was detected in the town.

Working on stamping out Covid-19, while great for the health of communities, extended the time frame it would filter through the country, and based on overseas experiences businesses were probably facing “a six month hit” in trade, she said.

Smaller businesses were particularly impacted, and would continue to be if workers got sick and the rest of the staff had to also isolate, which could be “devastating” for a business.

“For businesses that employ five to 10 workers, every worker is critical,” she said. “If you are running a business every dollar earned counts.”

A lot of businesses would struggle, although wage support from the Government was a positive aspect, Boswijk said.

She said businesses needed public support.

“We’re not in a lockdown. Businesses are open for business,” Boswijk said. “There may be certain limitations about how you can deal with that business but they are not in a lockdown.”

Nelson Regional Development Agency chief executive Fiona Wilson said economic confidence between and within sectors was mixed.

In the visitor sector, some operators had expressed a great sense of anxiety over the past few days, with comments including that Omicron was “killing confidence in travel”. Some people wanted to alter existing bookings in Nelson to a later date due to concerns about arriving into an Omicron zone, Wilson said.

However, in the research and development sector, some manufacturers were this week reporting steady progress under the red setting of the Covid-19 protection framework and were fairly optimistic about the year ahead, though had some anxiety about the supply chain uncertainty.

The Westpac McDermott Miller survey had 1558 respondents nationally.