Rotorua's soaring house market has not sheltered the city from a stiff economic decline as tourism continues to struggle and $125 million is shaved off the district's GDP.
But business leaders say despite the knocks
Hard times continue for Rotorua as it continues to suffer from the loss of international tourists. Photo / Getty Images
Rotorua's soaring house market has not sheltered the city from a stiff economic decline as tourism continues to struggle and $125 million is shaved off the district's GDP.
But business leaders say despite the knocks other primary industries are performing well and companies had pivoted to make the most of every opportunity.
The latest report from Infometrics shows the city's economy has continued to contract with the absence of international tourists and their spending fell by 21 per cent over the year to December 2020.
Over the same timeframes, GDP dropped by 3.4 per cent to $3684 million ($3.684 billion), consumer spend nosedived by 5.4 per cent and house price inflation accelerated by 27 per cent.
Rotorua Economic Development interim chief executive Andrew Wilson said 2020 was a real mixed bag but it had diverse primary industries to build on.
Sectors including forestry, agriculture, wood processing, manufacturing, construction, grocery and professional services were doing very well.
But those involved with the visitor economy had suffered.
''While business confidence is much lower in this sector, the challenge of the last 12 months has also stimulated a lot of innovation from Rotorua businesses working hard to create interesting new products that are focused on the needs of New Zealanders.''
Pre-Covid, 60 per cent of tourists visiting Rotorua were domestic and it continued to actively encourage New Zealanders to travel to the city while business events were another focus.
''This contributes $50m to our local economy each year and business travellers typically come here during the week and off-peak season. We've launched a new marketing campaign promoting Rotorua as a destination for business incentive travel and team building events.''
Infometics senior economist Brad Olsen said it was still incredibly tough in Rotorua for the economy and businesses.
He agreed domestic tourism was trying to pick up some of the slack from international visitors.
Another challenge for Rotorua was competition from other cities who were chasing the tourism dollar, Olsen said, but forestry and agriculture were trending.
''Global dairy trading has shown strengthening activity and the forestry numbers are a lot firmer than we might have expected. Chinese demand for New Zealand exports across the board almost, are quite strong at the moment.
''The Chinese economy is recovering swiftly which is a real boost for some of those key sectors who are reliant on it.''
Rotorua Chamber of Commerce chief executive Bryce Heard agreed and said forestry and farming forecasts were bright for the foreseeable future.
''I don't think there are going to be any significant downturns in those two primary drivers moving forward.''
He acknowledged the pain had been felt most in the critically important international tourism sector.
In his view, it was important the quality of the town and its iconic activities were maintained.
''We need to make sure we don't let things slide downhill so when we can push the go button with border control, we are still capable of responding and gearing up quickly. So anything that people can do to pivot and keep the cash register ringing from now to then is important.''
Heard also believed in looking ahead, particularly at the impacts of climate change and sustainability on businesses.
There was a ''new order rapidly emerging'', he said and New Zealanders' innovative skills will be in demand.
''We are heading down the sustainability and renewable track at pace and I think we should not only be thinking about surviving but also shifting into emerging market slots that other people aren't yet in.
''There will be opportunities in manufacturing, innovation, design, plastic substitutes, bio-materials, electrification, clean energy and all those sorts of areas.''
Fonterra global supply chain director Gordon Carlyle said in the 2018/19 season about $1b went to farmers in the Bay of Plenty.
''For every dollar a farmer earns, they spend up to 50 cents in their local community. The money flows back into local economies as farmers do things like reinvest in their businesses and make more purchases of on-farm supplies and equipment.''
Fonterra exports to more than 130 countries and it lifted its 2020/21 forecast Farmgate Milk Price range to $6.90 - $7.50 per kgMS.
Federated Farmers Rotorua/Taupo provincial president Colin Guyton said things were looking pretty good for farmers and they had renewed confidence.
''It was hard to forecast as we didn't know how Covid would affect us but it didn't end up being negative. The only downside has been getting in supplies like fence posts ... and the raft of regulations heading our way.''
House prices had also gone ballistic nationwide but Guyton's own farm GV had actually dropped.
In his view, that was because the banks were backing away from agriculture a bit and it was getting harder to get funds.
''But we think the banks will start looking favourably at agriculture again as we have paid back a bit of debt. For the first time in about 30 years, the money owed by dairy farmers, in particular, is less than it was a couple of years ago.''
New Zealand Kiwifruit Growers Inc chief executive Nikki Johnson said direct revenue from kiwifruit exports flowing back to growers in the Bay of Plenty contributes $1.6b to the local economy.
''As over 80 per cent of kiwifruit is grown in the Bay of Plenty, a significant proportion of this revenue will flow back into the local economy.''
The record volumes of kiwifruit being produced in the Bay of Plenty were also expected to drive up the 8000 full-time and 20,000 seasonal jobs, currently in the region.
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