A new report says Bay of Plenty could lose 14,500 jobs and $776 million in earnings, and Rotorua could be the worst affected. Photo / File
A new report on the impacts of Covid-19 on Bay of Plenty's economy reveals the region is expected to lose 14,500 jobs and $776 million in earnings by March 2021.
And Rotorua is expected to be worst hit.
The Infometrics report states that although the full extent of the shock was still to play out it was clear that the Bay's economy will be "irrevocably changed by this pandemic".
"The greatest economic shock in living memory."
But the region's primary exports and food production would support the local economy, it stated.
The report found Rotorua was expected to face a greater hit than the rest of the region due to greater portions of economic activity focused on the tourism sector - 41 per cent of the city's tourism spending was from international tourists in the year to January 2020.
About $776 million in earnings was expected to be lost due to an anticipated 14,500 Bay of Plenty people losing their jobs during the next 10 months.
Of these, low skilled workers are expected to bear the brunt, with nearly 7000 anticipated to lose their jobs. Highly skilled jobs such as specialist managers and hospitality, retail and service managers are also expected to be lost.
This would push the region's unemployment rate to 8.7 per cent. Its current rate is 4.3 per cent.
The report found tourism-related sectors would be most affected, with the lower tourism activity also likely to see the largest reduction in Māori employment, the report found.
The drop in tourism will see the largest declines in the transport, postal and warehousing industry with a loss of $198m while retail and wholesale trade will take a $138m hit.
Construction will fall by $121m and accommodation and food services by $114m.
The report predicted that once restrictions were relaxed and more usual economic activity resumed, domestic tourism would bounce back, to a degree.
Tourism operator Simon Short, who runs Velocity Valley, said it was too early for speculation but if the numbers were accurate, it was a bleak future for Rotorua.
"It's going to decimate the tourism industry ... if they're saying those sort of numbers of unemployment then that's probably going to be a similar number of businesses that will close or go into liquidation."
Short said the first signals of Covid-19's true impact would be in the first school holidays.
Destination Rotorua chief executive Michelle Templer said tourism employed more than one in five of the city's workforce last year, and the accommodation and food sector in the district employed a further 10.8 per cent.
"We know that the pandemic's impact on Rotorua will be significant."
Groups such as Whakahouhia te Whare Ohanga (Build Back Better) have been set up to represent key sectors that will be essential to Rotorua's recovery.
Templer said Rotorua was fortunate to have an economy built on a diverse range of industries including agriculture, forestry, wood processing, manufacturing and emerging technologies.
She said a number of partnerships and investments between central government, local government, local iwi and businesses will provide employment and contribute to the city's recovery.
Activities and Events Unlimited owner Ian Mexted-Dykes said while people knew Rotorua would be hit, "we were hoping it wouldn't be this bad".
Domestic tourism would help but that could only do so much. If unemployment was up, people would travel and spend less, he said.
"It's drastic. You can't try and be positive with those sorts of results."
He hoped industries such as agriculture and forestry would help keep unemployment numbers down.
Retail NZ chief executive Greg Harford said his members experienced a significant decline during levels 4 and 3.
However, many retailers had been having positive trading results since level 2 arrived. Overall the market was under substantial pressure, he said.
• Covid19.govt.nz: The Government's official Covid-19 advisory website
Harford said there had been a big increase in demand for online shopping which he expected to continue despite the pressure on sales overall.
"Household incomes are under pressure, and Retail NZ expects customers to potentially trade down in terms of brands over the next few months, looking for good value in the things they are buying."
"Covid-19 has had an enormous impact on us and will continue to do so."
Evolve spokesman Ben Sandford said the pandemic had an enormous impact on Rotorua and would continue to do so. Energy needed to be put into new ideas, and new ways of doing things.
"There will be tough times and the future cannot be known but we must plan, invest, and work to bounce back stronger than ever."
He said while the report highlighted the impacts of Covid-19, it also pointed to what could be done to help the city through this period.
He said this would require Government, councils, businesses and communities to work collaboratively to find the best solutions possible.
"One of the lessons from this is that when we act together we are stronger."
Epidemic Response Committee chair 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."
Bay of Plenty's primary exports and food production would support the local economy, the report found.
Agriculture, forestry, and fishing make up the region's third-largest industry, employing 9.7 per cent of the local workforce.
Continued primary export will be pivotal in supporting the region's economic recovery with 75 per cent of economic output in the primary sector being from non-logging and forestry activities.
Around 25 per cent of the Bay of Plenty Region's manufacturing sector by output is concentrated on food manufacturing, which will support employment, the report stated.
The least affected districts in New Zealand would be those whose economies are dominated by the primary sector and with large food manufacturing sectors which included the Western Bay of Plenty.
The Bay of Plenty's manufacturing sector puts the area in the middle of the two extremes.
* Rotorua mayor Steve Chadwick declined to comment until she was able to see the report. Waiariki MP Tamati Coffey could not be reached for comment.
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