Coronavirus: Waikato resilient to Covid's pummelling

Thursday, 20 August 2020

Hamilton City Council city growth general manager Jen Baird: “Being in a better position does not change the fact that it’s really tough out there.”

It will take a lot more than Covid-19 to bring the Waikato’s economy to its knees.

That’s the call from an economic analyst, following the release of the latest Infometrics Quarterly Economic Monitor for the June 2020 quarter – a tumultuous period that covered much of the level 4 and 3 lockdown and the resurgence that followed it.

Economic activity nationwide dipped 12.6 per cent per annum, with most of the regions suffering the worst of that blow.

However, Infometrics senior economist Brad Olsen said the Waikato region had not been hit quite as hard as other parts of the country, where an 11.8 per cent drop was recorded.

“There is a resilience to the Waikato economy that will help insulate it and that’s due in a large part to the very strong primary sector there.

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The continued export strength of the dairy sector remains an undeniable backbone for the Waikato’s economy, says Brad Olsen. (file photo)

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“It’s a breadbasket. Fifteen per cent of the country’s food production is located in the Waikato. It’s tied with Canterbury for food. Dairy is still really strong. Dairy exports were in double digit growth in the June quarter.

“Of course, there are other parts of the economy that did not fare quite so well. Tourism, for example … but overall for the Waikato it was not as bad as the dip that we saw nationwide.”

Not all regions experienced the economic effects of the pandemic equally. Otago had the hardest hit, with a 15.6 per cent drop, as the collapse in tourism activity hit a number of local economies. Meanwhile, the Manawatū-Whanganui and Gisborne regions weathered the storm as well as could be expected, with economic activity falling by less than 9 per cent.

Other statistics helped paint a more fulsome picture of the Waikato, Olsen said, such as a 4.7 per cent increase in resource consents for buildings in the year to the end of June, which was a little below the nationwide figure.

Non-residential consents had a 6.2 per cent rise in the same timeframe, which was pretty healthy when it was down 8.8 per cent in other parts of the country. That shows a real resilience in business activities.”

The Waikato had a more unified sector than other regions, Olsen said.

”With organisations like the Chamber of Commerce and Te Waka all talking to each other, the regional co-ordination appears to be really, really solid … and there are other really positive moves with the New Zealand Institute of Skills and Technology locating there.”

There had been job losses, with a 7 per cent increase in people on a Jobseeker Support benefit.

”That’s quite a considerable number there. Just under 14,000 people needing support.

”I expect that there will still be more job losses, with a wave coming through in November. There will be another round early next year.”

Olsen was anticipating another mixed bag in the next report in three months’ time, with a vibrant July being tempered by the current Auckland lockdown.

“Tough times remain, but overall I would say the Waikato is in a good position in comparison to other parts of the country.”

Hamilton City Council city growth general manager Jen Baird said her projections aligned closely with the Infometrics analysis, but the relative strength of Waikato’s economy needed to be taken into perspective.

“If it was an inter-regional competition it would be great. Being in a better position does not change the fact that it’s really tough out there … and fundamentally, we are all very much in this together.”

But while Hamilton and the wider Waikato were struggling with the Covid downturn, “once we get through that we are in a position to be one of the parts of the country that will economically grow very strongly.”

Even the blow to the tourism sector might not be as bad as it initially appeared, she said.

“Eighty per cent of Hamilton’s tourism is domestic. Albeit, some of them can’t get here for the next week or so, but we are still doing well in terms of visitors.”