A new report provides an overview of the anticipated economic impacts of Covid-19 on the Bay. Photo / File
The economic fallout from the coronavirus crisis could see the region lose $776 million in earnings and almost 15,000 jobs by March next year.
Those are the "stark" findings of an Infometrics report, commissioned by the Bay of Plenty Regional Council, which aims to provide an overview of the anticipated economic impacts of the Covid-19 pandemic on the Bay of Plenty region.
The report says the full impact of the "greatest economic shock in living memory" was yet to play out, but it was clear the Bay's economy will be "irrevocably changed" by the pandemic.
It also predicts the region's unemployment rate could double.
Bay leaders said the report painted a frank and stark picture but the impact on the Bay might not be a significant as other areas. They say the key factors that will aid the region's recovery are offsetting job losses, skilled labour, infrastructure and securing supply chains.
The report says the fallout from the pandemic could see the region's unemployment more than double from its current rate of 4.3 per cent rate to 8.7 per cent due to the potential $776m loss of earnings and the potential loss of 14,550 jobs,
Low skilled workers are expected to bear the brunt of the impact, with nearly 7000 anticipated to lose their jobs.
The report singled out retail, hospitality, construction, international students, tourism and Māori as potentially suffering the most.
Regional council chair Doug Leeder said while the report painted a "frank and stark" picture of the impact on the Bay but it might not be as significant as originally anticipated when compared to the rest of New Zealand.
Leeder said that was partly due to the prevalence of the agriculture, horticulture and export sectors.
"However, the report also makes clear that some parts of our rohe, such as Rotorua, face a much greater impact because of the strong focus on the tourism sector."
He said it was important to remember a downturn meant job losses and the personal impact of that could not be measured in the statistics.
"The value of a report like this is that it provides insight into where we should be focussing our energy and resources to cushion the economic blow for our local communities."
Other local councils and economic development agencies had also commissioned reports specific to their areas and Leeder said the data would help councils, industry bodies, iwi and other organisations build effective recovery programmes.
Priority One chief executive Nigel Tutt said the report was an economist's view of a highly unpredictable future.
Tutt said the report "largely tells us what we already know" in that there will be a recession and unemployment will rise but the Bay will be better off than the rest of New Zealand.
What was more relevant to the area, Tutt said, was what was actually happening in the local business community and how it can best recover.
"We're fortunate that most of our major industries have come through lockdown in reasonably good shape.
"There are two really important factors for recovery - how many jobs we can build to offset the ones we lose, central and local government spend is critical for this, and how we can quickly upskill people into those jobs."
Tauranga Chamber of Commerce chief executive Matt Cowley said although the Bay had its challenges, the region's economy had many strengths to help it recover from Covid-19.
"We are a strong food-exporting region, we're an attractive place to live, and we're located in the golden triangle.
"I agree that the region's recovery depends on the three key elements of skilled labour, infrastructure, and secure supply chains."
Tauranga mayor Tenby Powell said the economic impact was always going to be "extremely damaging to the economy across the country" and the Bay "was not immune to that".
Powell said it was now time to turn attention to ensuring the local economy was stimulated as much as possible and Tourism Bay of Plenty's No Place Like Home campaign and shovel-ready projects to create employment were ways forward.
Western Bay of Plenty mayor Garry Webber said Covid-19 had been "a real body blow" to the district and everybody must be prepared to share the pain to get through.
"I think it is time for everyone to ask themselves what they can do. Just as the late US president John F. Kennedy once said: 'Ask not what your country can do for you, ask what you can do for your country'."
Med Cafe owner Jo Brown said she was still "reasonably optimistic" with 16 years owning the cafe and loyal customers.
She said she was fortunate a large portion of her customers were locals to the area.
Despite the projected severe rise in unemployment, she said she felt luckier than a high-end restaurant as customers could spend $5 for a coffee which was still manageable.
"I've been doing this for 30 years, I'm experienced in what I do. You just have to hope for the best."
Tourism Bay of Plenty chief executive Kristin Dunne said domestic visitor spending reached $864 million in the year ending March 2020, which was 77.9 per cent of the total $1.1 billion spent across the Coastal Bay of Plenty.
"We will be relying on the strength of our domestic market and it is vital to our economy."
Dunne said tourism was one of the first-hit industries by the impact of Covid-19 and will take the longest time to recover.
"To the year ending March 2019, there are more than 8000 jobs directly employed by our local tourism industry which are at stake.
"Specific support is necessary if tourism is going to survive the impact of Covid-19 to rebuild and reimagine the sector for the future."
Retail NZ chief executive Greg Harford said his members were reporting a significant decline in shopping during levels 4 and 3.
But he said while many retailers were reporting positive trading results since opening in level 2 overall the market was under substantial pressure.
"The opening of stores at level 2 has led to a short-term boost in demand as consumers have tried to get goods that they have needed over the past two months," he said.
"But we expect that to dampen down over the coming days and weeks."
Leader of the Opposition and Tauranga MP Simon Bridges said the figures highlighted the importance of providing a "clearly articulated future-focused plan" to create jobs and grow the economy to boost confidence in the region.
"We need to do everything we can to help get New Zealand and our regions working again."
Additional reporting - Sandra Conchie
Economic Impacts of the Covid-19 pandemic on the Bay of Plenty – Early Estimates
- The report stated about 51 per cent of the Bay's workforce was able to work during alert level 4, slightly lower than the national average of 53 per cent. Under level 3, 74 per cent is expected to be operational, matching the national average.
- Once the recovery begins, there may be opportunities for these workers to be redeployed, the report stated.
- Bay of Plenty's GDP is forecast to contract by 7.3 per cent during the year to March 2021, compared with an anticipated 8 per cent nationally.
- Rotorua has been highlighted as a part of the region expected to face "a much more substantial hit" due to its significant role in New Zealand's tourism sector.
- Lower tourism activity was also likely to see the largest reduction in Māori employment. Construction was also likely to soften as population growth slows considerably and demand for additional housing diminishes.
Source: Infometrics, Bay of Plenty Regional Council
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