Grim times: region too specialised to be robust

Berl economist Dr Ganesh Nana is painting a grim picture of how Wanaka and Queenstown will fare in the aftermath of the recession.

• Riding out the recession

The country may be able to hold its own, even though the rest of the world is in a mess, and the wider Otago-Southland region may be reasonably well insulated from depression because of its agricultural diversity.

But the sub-region of Wanaka and Queenstown has had fewer eggs in the basket in recent years.

The towns have grown up on tourism and the property boom and that, unfortunately, means things "will look grim" for some time, Dr Nana said, when contacted this week.

"When I was down in Dunedin for the regional summit I got the feeling - and it has been backed up already - that Otago-Southland would be well-insulated given its agriculture, the dairying, the sheep farming sector. It is holding up quite well and is continuing to do so, although dairying is not so great.

"But Wanaka-Queenstown is more exposed because of tourism and the development and building boom over the last few years. That is probably a down-side. But - and this is a comment I make in all areas - this is not to talk ourselves into a downturn that is much worse than it really is," Dr Nana said.

Typically, Wanaka and Queenstown skifields rely on a highly mobile and youthful workforce from the northern hemisphere, many of them tertiary students on a working holiday.

After talking with ski industry people two weeks ago, Dr Nana's "gut feeling" is that "a lot" fewer people will be coming to ski in the region this year.

He believes southern snow industries would still get through this winter, as the Australian market was thought to be holding strong.

Some businesses would continue to grow and prosper but those that relied on the United States market or international automotive industry faced a grim period, Dr Nana said.

But what everyone was really bracing for was next summer, when the world's mess should be fully revealed and New Zealand would be fighting to hold its own, Dr Nana said.

Bad news stories already abounded, but there were some very positive stories too and it was important to maintain balance to avoid talking the country into a depression, he said.

Positives could be obtained from ideas raised at regional job summits, making sensible decisions about infrastructure, exporting to other markets such as China or India, or looking to export products "[to] areas that have not usually been relied on".

"There is an opportunity to spread the risk or diversify the economy, reduce the exposure to tourism," Dr Nana said.

The Queenstown Lakes District Council's announcement this week it would pull back on some capital projects to reduce $413 million debt by 2019 revealed the council was facing similar issues as other local authorities in deciding what it could afford to do without closing everything down, he said.

"In the ideal world, we would like to continue with infrastructure spending because it brings long-term benefits. But it is not an ideal world and it is a matter of getting the balance right . . . We cannot close the place down."

How long Wanaka and Queenstown spent in its state of grimness would depend on how quickly international companies were able to get back on top of things, Dr Nana said.

He was not surprised Wanaka people were still opening retail stores and hairdressing outfits.

"A lot of stories continued to surprise some but don't surprise us.

"There are still jobs and businesses being created out there.

"It is not an across-all-boundaries recession. There remain pockets of growth among the downturn, and a lot of that growth is relatively robust."