Covid 19 coronavirus: North's economic hit not as bad as national average, but that could change

Northland Chamber of Commerce head Steve Smith says Northland businesses will start to really feel the pain if the current Covid lockdown is extended beyond September 6.

Northland's economy has been hit hard from the Covid-19 pandemic, but the region has not fared as badly as many others across the country, new research shows.

However, a business leader warns that the situation could get far worse if the level 2 lockdown restrictions are extended further.

Infometrics senior economist Brad Olsen, who is from Whangārei, said Northland has taken a knock from the Covid-19 pandemic, but has weathered the economic storm better than the national average.

Olsen said provisional gross domestic product (GDP) was $208m lower in Northland in the June 2020 quarter compared to the June 2019 quarter, according to Infometrics estimates.

Northland's GDP was $1.715b in the June 2020 quarter compared to $1.923b in the June 2019 quarter.

''Northland's economy has taken a knock from the Covid-19 pandemic, but has weathered the economic storm better than the national average. Infometrics estimates that
Northland's economic activity fell 10.8 per cent per annum in the June 2020 quarter, a smaller hit than the 12.6 per cent pa decline in economic activity nationally,'' he said.

Spending activity in Northland reduced during the level 4 lockdown, and was at half of normal levels during the middle of alert level 4. However, spending activity has bounced back since then, with Northland's card spending up nearly 12 per cent pa over the July month as Northlanders got moving again and the Northland economy started to regain momentum.''

Olsen said Northland's strong primary sector has supported economic activity, with dairy, meat, and horticulture exports holding up well throughout the June 2020 quarter.

Infometrics estimates that the dairy payout in Northland for the season recently ended is around $612 million – a $79m increase from the previous season.

Tourism and construction activity across Northland reduced, with visitor spending down 8.6 per cent per annum, over the June 2020 year.

''The collapse of international tourism will continue to hit the sector, but domestic tourism was expected to partially fill the gap. However, with Northland now cut off from the rest of the country by Auckland's status at level 3, tourism-related organisations will be doing it tough,'' he said.

Northland's labour market remains in a tough position, with more than 10 per cent of the working-age population in Northland on a Jobseeker Support benefit at the end of June the highest in New Zealand.

''With additional support announced from Government to help support the local construction sector, and local business leaders moving swiftly to support the economy, the Northland economy is showing resilience in the face of a severe economic shock,'' Olsen said.

Infometrics senior economist Brad Olsen says Northland has taken a knock from the Covid-19 pandemic, but has weathered the economic storm better than the national average.

Northland Chamber of Commerce head Steve Smith said Northland's business community had handled the lockdown restrictions relatively well, so far, but that could change if the lockdown was extended further.

Smith said with Northland effectively cut off from the rest of the country, given Auckland's level 3 lockdown, the accommodation sector was being hit under level 2.

''We've been getting reports of the accommodation sector that some of the larger players had recovered bookings back to 80 per cent (since the first lockdown), but that has fallen to about 25 per cent, and could get worse,'' he said.

''Everyday day that goes by like that you can't get back.''

The hospitality sector seemed to be coping fairly well. With Aucklanders not allowed up, it seems that locals were backing their local venues.

''Just (Monday) I was in Fat Camel (Whangārei restaurant) and it was packed. And that was a Monday afternoon - and it was the same at many other places too,'' he said.

The construction sector seemed to have plenty of building supplies but an extended lockdown that. The manufacturing sector could also struggle to get parts and products if the lockdown was extended further.

Smith said it was too early to say how the latest lockdown had affected the retail sector.

''The stats are showing there was an initial upsurge (after the first lockdown ended) but it's too early to say what the impact (of the latest lockdown) is. Those that seem to be doing well are the ones that have a diverse range of products.

''Arthur's Emporium stocks so many different things and is going really well. They are moving a lot of different products and that diversity serves them well.''

He said the vehicle market seemed to be doing well, as people who would normally have gone on a holiday are instead upgrading their vehicles, with second-hand car sales buoyant.

But, Smith said, if the lockdown was extended, or alert levels lifted, in Northland that could all change.