Cold economic stats don't reflect the human cost of these past five weeks. Photo / George Novak
Cold economic stats don't reflect the human cost of these past five weeks. Photo / George Novak
Editorial
EDITORIAL:
When New Zealand was about to go into lockdown last month Ardern supporters quickly moved to try and head off negative overseas commentary by posting selected stats on social media.
They used data such as unemployment, GDP and Covid-19 deaths per million people and compared New Zealand's performance withthe likes of the UK and the US.
The idea was the comparisons could be used as defence against criticism of the elimination-by-lockdown strategy employed by the Government.
Looking in hindsight, that offensive can be backed up by yesterday's GDP figure which showed the domestic economy was absolutely humming prior to the Delta outbreak here that threw us back into lockdown.
GDP rose 2.8 per cent in the June 2021 quarter – well ahead of market estimates – and culminated in a 17.4 per cent bounce from the same quarter last year, following the first lockdown-affected period.
The big question is, will we see the same bounce-back in economic activity post this current lockdown?
Some economists and major retailers like Briscoe Group are optimistic, albeit with a big caveat of how long Auckland will remain constrained above level 2.
"Given that the economy was running hot going into the lockdown in August, the prospect of another V-shaped rebound becomes more likely," Westpac chief economist Michael Gordon says.
The market is starting to refactor in interest rate rises, increasing the odds of the Reserve Bank opting for a 50 basis point hike on October 6.
Briscoe managing director Rod Duke noted in his company's results announcement earlier this week that based on last year's experience it could be expected that "pent-up" demand would drive strong sales from October. That gave Briscoe confidence to forecast full-year net profit above last year's record $73.2 million.
The counter to all this are the factors that came into play earlier this year such as the global supply chain challenges and chronic labour shortages.
Those issues will hinder companies' ability to ramp up production, make investment decisions and implement growth strategies.
Alongside that is the fact that the cold data reflected in the GDP number and unemployment stats don't reflect the human cost of these past five weeks, and the toll being taken by hospitality and tourism operators especially.
More than 18 months into the global pandemic, many Auckland businesses simply can't pivot any further and are finally making the heartfelt decision to shut up shop for good, as this story shows.
As one tourist operator told the Herald, it has been death by a thousand cuts.
The same goes for the hospitality sector, with no one able to get any clear guidance from the Government about operating economically in different levels and the key question of what happens post vaccination.
Finance Minister Grant Robertson remains optimistic of a rebound like last time
Finance Minister Grant Robertson appears to be relying on the same sort of rebound from this lockdown as experienced last year.
But he must be aware that the economic environment is different due to the supply chain and labour market difficulties and the fact that a lot of the rebound was fuelled by fiscal support.
At the same time, customer demand has changed with more people working from home.
Like most things Covid-related, only time will give us the definitive answer to these questions.
