14 April 2020
Media: Rotorua Daily Post
Topic: COVID-19 impact scenarios
Enquiry
For Mayor Chadwick:
Projections from the treasury today showed several scenarios in which the
* The annual average GDP growth is shown to fall by as little as 0.5 percent or as much as 23.5 percent in the fiscal year ending June 2021.
* Estimates of the unemployment rate in the June 2021 quarter range from 5.5 percent to 22 percent.
* Can I please have a comment, as Rotorua's Mayor, on the announcement.
* How will the best and worst-case scenario impact Rotorua?
* Is this likely to impact the economic recover plan outlined last week?
* How? Will it be altered to include a wider range of those struggling?
For Rotorua Economic Development:
Projections from the treasury today showed several scenarios forcasting New Zealand's economy.
I am seeking a comment from economic development and Destination Rotorua.
The main points highlighted were:
- The annual average GDP growth is shown to fall by as little as 0.5 percent or as much as 23.5 percent in the fiscal year ending June 2021.
- Estimates of the unemployment rate in the June 2021 quarter range from 5.5 percent to 22 percent.
- Could I please have a comment for the above from both of your hats.
- What would it mean for Rotorua, a city which is largely based on Tourism and hospitality, if our GDP fell 23% and our unemployment reached 22%?
- Do you think it would be more than the projection of unemployment and fall to GDP given the strong workforce in forestry and toursim?
- How long do you think the city could survive at these levels?
- What will Rotorua look like at these numbers?
- What is being put in place, other than the RLC economy recovery plan, to support over a fifth unemployment?
Response
From Mayor Steve Chadwick:
There is still too much uncertainty about what will happen and the impact of that to accurately determine what each or any of these scenarios would mean for Rotorua. Many factors would influence each scenario, including our response - locally, nationally and globally.
What we do know is that our community and our economy has been significantly impacted already and we face some big challenges in the coming months and years. Council is working closely with local stakeholders and with Central Government and its agencies to support and plan for local recovery, aligned with the Government's strategy to fight the virus, cushion the impact and prepare for recovery.
While these scenarios are not official forecasts, it will be useful for us to consider them against our Rotorua economic recovery plan, to determine how we might need to adjust our response if any of the scenarios eventuated.
From Rotorua Economic Development:
Our role as the city's Economic Development Agency is to focus on cushioning the economic and social impacts of the virus in Rotorua by working with iwi, local businesses, Rotorua Lakes Council and Central Government to position Rotorua for recovery.
The Treasury's scenarios will feed into our recovery planning, and they are also useful in calculating COVID-19's potential impact.
Equally there are data sets that show for example that the domestic tourism opportunity has increased by an estimated 10 billion dollars in the near term (approximate overseas expenditure by New Zealanders each year) so there is real opportunity for Rotorua to enhance our position as a favoured domestic holiday destination.
Infometrics data shows that in 2019, tourism accounted for 22.7% of employment in Rotorua. The same figure for New Zealand as a whole was 9%, showing our region's comparatively higher exposure in the tourism sector. The accommodation & food services sector is also strongly dependent on the visitor economy, employing 10.8% of the region's workforce That gives us a point of comparison for measuring the impact of the virus in the short and medium term and also indicates areas where the impact on jobs is likely to be the greatest. However other sectors in the Rotorua economy such as forestry should recover more quickly following pent-up demand and an ability to operate effectively with social distancing in place.
RED is setting up a Rotorua Inc. Whakahouhia te Whare Ohanga Steering Group to foster a collaborative approach to building back better, driven by the business sector and Te Arawa. There is an opportunity to encourage innovative, disruptive and sustainable business and sector development that aligns with Rotorua's unique strengths.
