Local economic effects of COVID-19 . Trust Tairawhiti . Brad - PowerPoint PPT Presentation

Local economic effects of COVID-19 . Trust Tairawhiti . Brad Olsen – Senior Economist June 2020

A U-shaped recovery This recovery will take time Infometrics Treasury BEFU 2020 GDP forecast comparison, annual running totals, 2009/10 $b 290 280 270 260 250 240 230 220 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23

Job losses will rise How big is the labour market hit? Infometrics Treasury BEFU 2020 Unemployment rate forecasts, %, seasonally adjusted 12 10 8 6 4 2 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23

Spending hit Cutting back on discretionary spending Private consumption, annual running totals, 2009/10 $b 170 COVID-19 pandemic 165 Global Financial Crisis (rebased) 160 155 150 18 19 20 21 22 23

Tourism Tourism might never be the same Total arrivals, Apr 20 fcast Annual visitor arrivals Total arrivals, Jan 20 fcast 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 01 03 05 07 09 11 13 15 17 19 21 23 25

Building (nationally) Turning off the tap for residential development Forecast comparison of year-ended work put in place, 2009/10 $m 12,000 10,000 8,000 Apr 20 forecast 6,000 Jan 20 forecast 4,000 16 17 18 19 20 21 22 23 24 25

Gisborne faces a lower hit • GDP decline of 5.9% for the March 2021 year • Smaller than the 8.0%pa drop for NZ • Employment decline of 7.7% for March 2021 year • 1,700 jobs expected to go • Slightly lower than the NZ drop of 9.8% • Unemployment rate expected to increase to 9.3% , up from 6.9% at present • At Level 3, 79% of the workforce can work (NZ=74%), after having only 57% working at Level 4 (NZ=53%)

Still moving, but not as much Downturn in traffic Gisborne District New Zealand All traffic flows, index, 1 Jan 2020 = 100, 7-day moving average 120 100 80 60 40 20 0 1-Jan-20 21-Jan-20 10-Feb-20 1-Mar-20 21-Mar-20 10-Apr-20 30-Apr-20 20-May-20

Still moving, but not as much Downturn in freight Gisborne Region New Zealand Heavy traffic flows, index, 1 Jan 2020 = 100, 7-day moving average 120 100 80 60 40 20 0 1-Jan-20 21-Jan-20 10-Feb-20 1-Mar-20 21-Mar-20 10-Apr-20 30-Apr-20 20-May-20

Food exports show strength Total Dairy Annual % change, 3-week moving average Forestry Fruit Goods trade to the world Meat Non-food manu Seafood 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% 21-Feb 06-Mar 20-Mar 03-Apr 17-Apr 01-May 15-May

Forestry isn’t as flash Wood prices show a short-term jump PF Olsen Index PF Olsen Index 1 50 1 40 1 30 1 20 1 1 0 1 00 90 80 70 60 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 20

Forestry isn’t as flash Chinese construction investments slide Annual % change Investment in construction & installation engineering 40% 30% 20% 1 0% 0% -1 0% -20% -30% 07 08 09 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 20

Tourism Regional tourism employment, 2019 Share of total employment Otago Region West Coast Region Marlborough Region Northland Region Nelson Region Bay of Plenty Region Southland Region Waikato Region Tasman Region New Zealand Canterbury Region Wellington Region Auckland Region Hawke's Bay Region Manawatu-Wanganui Region Taranaki Region Gisborne Region 0% 5% 10% 15% 20% 25%

GDP loss Change in 2021, $m Transport, Postal and Warehousing -$19.22 Retail and Wholesale Trade -$16.52 Construction -$13.18 Agriculture, Forestry and Fishing -$9.31 Unallocated -$8.78 Accommodation and Food Services -$8.27 Owner-Occupied Property Operation -$8.02 Professional, Scientific and Technical Services -$6.08 Rental, Hiring and Real Estate Services -$5.93 Non-food Manufacturing -$4.08 Information Media and Telecommunications -$3.50 Financial and Insurance Services -$3.32 Administrative and Support Services -$2.99 Arts and Recreation Services -$2.88 Other Services -$2.47 Food Processing and Manufacturing -$1.61 Mining, Electricity, Gas, Water and Waste Services -$1.04 Education and Training $0.54 Public Administration and Safety $0.57 Health Care and Social Assistance $1.30 -$25 -$20 -$15 -$10 -$5 $0 $5

Employment loss Filled led jobs, s, reduction tion in 2021 21 Retail and Wholesale Trade -319 Accommodation and Food Services -304 Agriculture, Forestry and Fishing -200 Transport, Postal and Warehousing -197 Construction -193 Professional, Scientific and Technical Services -97 Non-food Manufacturing -86 Administrative and Support Services -76 Other Services -71 Arts and Recreation Services -54 Information Media and Telecommunications -45 Financial and Insurance Services -28 Food Processing and Manufacturing -26 Rental, Hiring and Real Estate Services -22 Health Care and Social Assistance -7 Public Administration and Safety -5 Mining, Electricity, Gas, Water and Waste Services -5 Education and Training 27 -350 -300 -250 -200 -150 -100 -50 0 50

Māori Employment loss Māori filled jobs, reduction in 2021 Accommodation and Food Services -180 Agriculture, Forestry and Fishing -162 Retail and Wholesale Trade -136 Transport, Postal and Warehousing -119 Construction -94 Administrative and Support Services -65 Food Processing and Manufacturing -53 Health Care and Social Assistance -48 Non-food Manufacturing -46 Other Services -36 Professional, Scientific and Technical Services -32 Education and Training -26 Arts and Recreation Services -23 Information Media and Telecommunications -16 Public Administration and Safety -13 Rental, Hiring and Real Estate Services -12 Financial and Insurance Services -12 Mining, Electricity, Gas, Water and Waste Services -5 -200 -180 -160 -140 -120 -100 -80 -60 -40 -20 0

Earnings losses $m, reduction in earnings by March 2021 Retail and Wholesale Trade -$15.72 -$12.59 Construction Transport, Postal and Warehousing -$12.25 Agriculture, Forestry and Fishing -$9.78 -$9.65 Accommodation and Food Services Professional, Scientific and Technical Services -$7.88 -$5.19 Non-food Manufacturing Administrative and Support Services -$3.72 Other Services -$3.31 -$3.21 Information Media and Telecommunications Financial and Insurance Services -$2.69 Arts and Recreation Services -$2.58 -$1.49 Food Processing and Manufacturing Rental, Hiring and Real Estate Services -$1.36 Public Administration and Safety -$0.41 -$0.39 Health Care and Social Assistance Mining, Electricity, Gas, Water and Waste Services -$0.29 Education and Training $1.57 -$18 -$16 -$14 -$12 -$10 -$8 -$6 -$4 -$2 $0 $2 $4

Brad Olsen – Senior Economist brad.olsen@Infometrics.co.nz +64 21 253 5646