Data shows the West Coast economy was tracking well for the year to March 2020. However, following the impact of COVID-19, forecasts going forward are painting a far more challenging picture.
Data released by Infometrics for the year to March 2020 reveals Gross Domestic Product (GDP) on the West Coast was up 2.0% from a year earlier, outperforming New Zealand’s 1.6% growth rate during the same period.
With the impact of COVID-19, and the border closures, a lot has obviously changed since then. The data for the March 2020 year only captures the very early stages of the pandemic.
Even before COVID-19, our tourism sector had been hit hard by a series of extreme events; including the Waiho Bridge washout, Omoto slip and the disruption caused by the Mt Hercules slip. The data from Infometrics shows total visitor spending for the year to March 2020 fell from $522m to $480m.
Despite this significant drop in visitor spending, the West Coast economy finished the period with $42m growth in GDP and 139 new jobs - highlighting the importance of a diversified economy.
Looking at the situation going forward, another Infometrics report, commissioned by Treasury, forecasts that the West Coast will be one of the most heavily affected regions by the pandemic and its economic aftermath.
The report suggests the West Coast may have 1,300 less jobs by March 2022, with our economy forecasted to take a $94 million hit.
The disruption caused by COVID, and the associated job losses, is projected to take some time to recover from. The modelling suggests our GDP won’t be back to pre-COVID levels until March 2025, by which stage jobs are expected to rebound above 2020 levels.
Before COVID, tourism accounted for 10.4% of our region’s economic activity, and 51% (or $231m) of our tourism spending came from international visitors.
Much work has been done to attract the domestic market to the Coast. Increases in domestic travel have helped pick up some of the slack but spending by New Zealanders will not come close to filling the hole caused by border closures.
The projections on jobs losses are very concerning.
A recent survey of Glacier Country businesses reveals that 16 businesses have closed so far, and 393 full-time jobs in addition to 125 part-time and/or casual jobs have already been lost.
This is devastating for the economic and social fabric of such small communities.
Based on the Treasury-commissioned forecasts and the current realities we are documenting on the ground we are working with agencies to look at options for support.
We need to ensure communities are viable and businesses are still around to share in the recovery when it finally comes.