The Queenstown-Lakes District is expected to be New Zealand’s worst-hit region when it comes to the economic cost of Covid-19.
Newly released figures show the region is expected to have 9000 fewer jobs by 2022 and its economy is forecast to take a $785 million hit.
This is according to data from Infometrics – just publicly released by Treasury, which commissioned the economic forecasting agency to research Covid-19’s impacts on the regions.
The data shows, perhaps unsurprisingly, that Queenstown – the country’s tourism and hospitality capital – would bear the brunt of the Covid-19 economic fallout in New Zealand.
Employment in the region is forecast to drop by 28.5 per cent by in the two years to March 2022.
It’s a similar story when it comes to the district’s economic growth – Infometrics expects that to drop by 24.8 per cent over the same period.
A large part of that hit, according to the report’s author senior Infometrics economist Gareth Kiernan, is due to recent lack of tourism in the area.
“Tourism represents an estimated 56 per cent of the district’s economy, with almost two-thirds of that spending coming from international visitors.”
Last year, the Government shut the borders to all but returning New Zealanders in a bid to keep Covid-19 out of the country.
Kiernan said although increases in domestic travel have helped pick up some of the slack, spending by New Zealanders will not come close to filling the hole caused by the border closures.
But there is some good news for Queenstown, according to the figures.
Overall employment in the region is expected to climb back to 27,000 by 2025.
Although that’s 4000 below pre-pandemic levels, it’s 5000 higher than the expected 2022 low point.
Meanwhile, Otorohanga District is the only region in New Zealand which is not expected to see a Covid-19 induced employment downturn.
The figures show that the number of jobs in the area will bounce 3.2 per cent to 5231 by 2022. But by 2025, that figure is expected to fall to bellow pre-pandemic levels.
The data also reveals which sectors of the economy are likely to be hit the hardest, with the accommodation and food services sector taking the top spot.
Infometrics predicts there will be 44,000 fewer jobs in that sector in March 2022 than there were in March 2020, when there were 170,000 people working in this industry.
But, the same sector is expected to receive the biggest employment bump in the post-pandemic world.
The data predicts some 162,000 people will be working in accommodation and food services by March 2025 – an 8.7 per cent jump from the 126,000 expected employees in March 2022.
The numbers are similar when looking at the value of the industry as a whole – the accommodation and food services sector is expected to lose $1.7 billion by 2022.
But, Infometrics forecasts the sector’s value to bounce back to $6.1b by 2025.
This might be good news, but Kiernan warns this rebound does not tell the “full story”.
“The level of economic activity in the accommodation and food services industry is projected to be lower in 2025 than it was in 2020, even with relatively strong growth in the second part of the forecast period.”
He said that the people who had been working in this industry will likely start working in agriculture, forestry, fishing and mining.
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