Forecast dire for economy

The coronavirus crisis is set to have the greatest impact in living memory on Taranaki’s economy and will send unemployment skyrocketing, a new report predicts.

Commissioned by Venture Taranaki and New Plymouth District Council, the report, released yesterday by economists Infometrics, anticipates an 8.5 per cent contraction in regional GDP for the year to March 2021.

This is slightly worse than the 8.0 per cent drop forecast nationally.

Jobs in the region are expected to decline by 9.5 per cent compared to an 9.8 per cent drop nationally.

It estimates 5500 jobs will be lost during the next 12 months – more than nine per cent of the workforce – resulting in a fall of $312 million in wages being paid into the region, with unemployment forecast to reach more than 10 per cent.

The accommodation, food services, retail and wholesale trade, transport, postal and warehousing sectors were anticipated to be hardest hit, with more than 500 jobs also expected to be lost in the construction industry.

But it’s not all doom and gloom, with potential opportunities for recovery including non-residential construction projects, in particular the $300 million Project Maunga Taranaki Base Hospital redevelopment, being touted as a critical lifeline for both the construction sector and the regional economy.

New Plymouth District Council mayor Neil Holdom said the document made for dire reading and the response must be a coordinated Team Taranaki approach to soften the impact and minimise financial harm, whilst creating a platform for the growth which followed an economic downturn.

‘‘We can thank our farming community for things not being a lot worse and so start from there – determining how we can support

‘‘Taranaki has a strong food production industry, which accounts for a significant proportion of our GDP and jobs.’’ Justine Gilliland

Venture Taranaki Chief Executive

food producers to earn higher returns for their existing production as they are clearly New Zealand’s primary income earner,’’ Holdom said.

Venture Taranaki Chief Executive Justine Gilliland said the main pillars of the region’s economy – energy and food production – were expected to experience mixed fortunes.

There had been a significant plunge in oil prices and, compounded with Covid-19, the energy sector was forecast to take the biggest hit in GDP terms while food production and exports remained strong, which was expected to continue.

‘‘Taranaki has a strong food production industry, which accounts for a significant proportion of our GDP and jobs,’’ Gilliland said.

‘‘This economic backbone will play a pivotal role in our economic recovery and future growth.’’

She said the region was also less exposed than others to the drop in international tourism while its share of the domestic market was stronger.

Ministry of Business Innovation and Employment data showed $429 million was spent by visitors to the region for the year

ending January this year, with domestic tourism accounting accounting for 78 per cent or $334 million.

‘‘While this may offer little comfort to our region’s tourism operators, it does send a more positive signal of recovery once domestic travel is safe and permissible,’’ Gilliland said.

During alert level four, 56 per cent of Taranaki’s workforce was able to work, while 77 per cent were likely to return under level three. This is better than the national rates of 53 per cent and 74 per cent respectively.

Holdom said it was an opportunity for the Government to determine what investments it must make to help transform the national and local economy.

He believed a prudent approach would be to allocate an initial pool of $10-$15 billion to develop the education, food production and energy sectors along with public infrastructure and a focus on building the types of assets to underpin a transformation of Aotearoa’s

economy in the post Covid-19 world.

‘‘Our children are going to have to pay for all this so there must be a strong focus on the education of our people to retrain and develop, a focus on growing the profitability of our food production sector sustainably, on investing in lower carbon energy and in essential public infrastructure like water to underpin the future needs of Kiwis yet to be born, all opportunities that can be developed in Taranaki.’’