Report shows early effects of lockdown

Dunedin and Queenstown’s economies were buoyant at the start of the year, but Covid-19 has caused a ‘‘precipitous drop’’ in those rosy figures, new research shows.

The Infometrics Quarterly Economic Monitor, released today , assessed the economic performance of provincial New Zealand up until the end of March.

At the start of that period, most people had not heard of a coronavirus, but by the end of March New Zealand was five days into Alert Level 4.

Infometrics senior economist Brad Olsen said the latest monitor report had captured the very start of the economic damage expected to be wreaked by Covid-19.

Dunedin tourism suffered a steep decline in March as Chinese tourism and cruise ship visits halted.

Queenstown suffered a similar decline, and Infometrics predicted many of the non-residential building consents issued at the start of the year — 47% of which were for visitor accommodation — would not proceed.

Infometrics also made gloomy predictions about unemployment, which last week’s Budget forecast would peak at 9.8% in the September 2020 quarter.

‘‘With the knock-on effects of the lockdown reaching almost every sector of the economy, we are forecasting the unemployment rate to rise to 9% in the March 2021 year,’’ Mr Olsen said.

‘‘Infometrics is now forecasting the loss of 250,000 jobs nationally over the next year, followed by a long period of restructuring the economy.’’

Economic growth in Dunedin and Queenstown, 2.5% and 2.8% respectively, was well ahead of the national figure of 1.7%.

Dunedin recorded a 19.2% increase in house prices and a 2.4% increase in consumer spending, while Queenstown experienced an 85.9% increase in non-residential consents and a 4% increase in consumer spending.

Southland is not included in the Infometrics survey.

Enterprise Dunedin John Christie said the Infometrics figures showed Dunedin entered the Covid-19 pandemic period in a strong position.

‘‘Further job losses in Dunedin will emerge over the coming months, but we expect Dunedin's economy to perform better than the rest of New Zealand, and some of the inland parts of Otago.

‘‘There is a looming high volume of large scale, committed infrastructure and major construction work in Dunedin that has significant external public funding.

‘‘This work will provide a significant amount of activity for the construction sector and services across the city, as well as shore up confidence over the intervening months before projects can get under way.’’

The effects of the Covid-19 recession were already being felt in Dunedin, as the number of work-ready recipients of Jobseeker Support rose by 660, a 32% increase, Mr Christie said.

‘‘Weekly retail spending in Dunedin fell more than 60% during lockdown, but by May 3 had recovered to just over half its usual level.’’

mike.houlahan@odt.co.nz