Queenstown-Lakes District Quarterly economic monitor - March 2020

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Overview

Indicator Queenstown-Lakes District Otago Region New Zealand
Annual average % change
Gross domestic product
2.8%
2.4%
1.7%
Traffic flow
-0.1%
-0.1%
-0.2%
Health Enrolments
6.9%
5.3%
2.5%
Consumer spending
4.0%
3.3%
3.0%
Residential consents
5.4%
0.7%
9.0%
Non-residential consents
85.9%
48.5%
-0.4%
House prices*
0.2%
5.1%
5.9%
House sales
0.4%
-1.9%
2.0%
Tourism expenditure
-0.09%
-0.8%
1.4%
Car registrations
-6.1%
-2.2%
-11.5%
Commercial vehicle registrations
-19.4%
-11.6%
-12.8%
Jobseeker Support recipients
38.8%
4.2%
11.7%
Level
Unemployment rate
1.1%
3.4%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Queenstown-Lakes District

Queenstown-Lakes’ economy grew by 2.8% in the year to March 2020, according to Infometrics provisional GDP estimates. Queenstown-Lakes’ growth rate was easing for several years as visitor arrivals were levelling off. While COVID-19 has had some impact on this quarter, the full effect will become apparent in future quarters as the district enters a deep and sustained downturn due to the loss of international visitors. Infometrics is forecasting a 91% fall in international tourist spending and 21% fall in domestic tourist spending, nationally for the year to March 2021.

For the year to March 2020, the unemployment rate held steady at the very low level of 1.1%, however Jobseeker Support recipients started to jump in the latter part of the quarter as the impact of COVID-19 became apparent. The latest data from MSD shows the number of recipients grew from 29 in February 2020 to 473 in April 2020, with subsequent increases likely to follow as the wage subsidy scheme runs out and workers are made redundant.

Non-residential building consents jumped substantially in the past year, with $346m issued in the year to March 2020, compared to $186m in the previous year. However, with a severe downturn in tourism, it is probable that many of these projects will not proceed. Visitor accommodation made up 47% of non-residential consents in the past year, and shops, restaurants, and bars made up 17%. Residential building consents grew 5.4%, and due to shorter construction timeframes, most of these projects are likely to be completed. Construction workloads will deteriorate later in the year as existing projects are finished.

Overview of national economy

The COVID-19 pandemic has upended the economy and plunged New Zealand into the sharpest recession in living memory. The March quarter includes the full progression of the virus, from its origins in China and subsequent hit to New Zealand exports, through to border closures forcing lower tourism arrivals, before culminating in the lockdown of New Zealand under Alert Level 4. Our March 2020 Quarterly Economic Monitor only captures the initial economic effects of putting the New Zealand economy on life support. The June Monitor will better reflect activity changes. No sector of the economy will be spared, with the regional impacts dependant on the local economic structure – Infometrics is now forecasting the loss of 250,000 jobs nationally over the next year, followed by a long period of restructuring the economy.