Auckland businesses prepare for economic impact of level 3

Author
Newstalk ZB / NZ Herald,
Publish Date
Wed, 12 Aug 2020, 11:47AM
Photo / File

Auckland businesses prepare for economic impact of level 3

Author
Newstalk ZB / NZ Herald,
Publish Date
Wed, 12 Aug 2020, 11:47AM

There is disappointment from the business sector that Covid-19 has returned to the country.

Brad Olsen, senior economist at Infometrics said that the restrictions placed on Auckland would have an impact on the wider economy.

"By our estimate, around about 28 per cent of Auckland's workforce cannot operate under level three, that's about 250,000 jobs. We're likely to see that number of people not operating," Olsen said.

Based on the spending patterns seen across New Zealand last time the country was under alert level three "you're looking at around $60-$69 million less being spent over the next three days alone [in Auckland] under the level three lockdown."

The restrictions announced on Tuesday evening alone could knock around 0.2 per cent off New Zealand's economic output in the September quarter, Infometrics estimated.

"The question is at the moment, both for Auckland and the rest of the country, do we see any shift to level four in the near term, do we see basically the extension of level three for an extended period, or even level two.

"But at the moment what I think it points to is this is going to hit businesses just as everyone thought things were getting better … The big highlight is, it's not over and it won't be over for a long, long time."

A slowing of activity in Auckland would hit activity elsewhere.

"Not that we have different regions operating under different levels, you've got to remember just how important Auckland is, just from an economic point of view.

"Not only is it a good third to 40 per cent of the nation's economy, but at the same time there are such critical linkages there that you could well see a slight slowing in activity across the rest of the country just because Auckland's not operating at its normal capacity."

Compared to the first lockdown, there was a question of "the economic ramifications of whether or not people abide by the lockdown in the sense that if they don't and they have to extend it for a longer period, that of course that causes longer and further economic damage".

Retail NZ says the move back into lockdown is a blow for the industry that was yet to get back on its feet after more than eight weeks under lockdown earlier this year.

"My heart really sank when I heard the news - it's really disappointing for everyone in New Zealand, but especially for those businesses that have been struggling to recover from the lockdown that ran from March to May," Greg Harford, chief executive of Retail NZ, told the Herald.

"It could well be the nail in the coffin for a number of small businesses that just don't have the resources to survive another period."

Meanwhile Auckland Chamber of Commerce chief executive Michael Barnett told Newstalk ZB's Mike Hosking today that his "heart sank" when he heard about a fresh lockdown from today.

He said the moves would be "destructive and confusing" for business-owners and he was hoping to see a full, detailed response from the Government.

"If it goes beyond three days, it's going to be devastating for the economy."