Rotorua District Quarterly economic monitor - June 2020

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Overview

Indicator Rotorua District Bay of Plenty Region New Zealand
Annual average % change
Gross domestic product
-3.2%
-1.6%
-2.1%
Traffic flow
-9.9%
-8.8%
-9.4%
Health Enrolments
0.6%
2.5%
2.5%
Consumer spending
-4.4%
-1.4%
-2.8%
Residential consents
5.7%
-1.4%
8.1%
Non-residential consents
-4.0%
-29.1%
-8.8%
House prices*
9.1%
7.4%
7.5%
House sales
-13.1%
-5.7%
-6.0%
Tourism expenditure
-16.0%
-10.8%
-12.3%
Car registrations
-9.3%
-12.3%
-19.3%
Commercial vehicle registrations
-26.9%
-22.4%
-24.6%
Jobseeker Support recipients
19.8%
22.6%
19.0%
Level
Unemployment rate
5.7%
4.4%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Rotorua District

The Rotorua Lakes District economy has been one of the worst hit by the COVID-19 pandemic, with provisional Infometrics GDP estimates showing a 14%pa fall in the June 2020 quarter, which resulted in an annual decline of 3.2% in the June 2020 year. Rotorua’s annual GDP decline was the third largest across the country. Economic activity fell 1.6% across the Bay of Plenty as a whole and was down 2.1% nationally in the June 2020 year.

The closure of New Zealand’s borders has resulted in a 16% decline in tourism spending in Rotorua, from $853m in the June 2019 year to $717m in the June 2020 year, although this is still well above spending levels seen as recently as 2014.

The fall in tourism spending will have contributed to the decline in consumer spending. Electronic card spending on retail purchases fell 23%pa in the June quarter according to Marketview data, resulting in a 4.4% fall in the June 2020 year compared with a 1.4% fall across the Bay of Plenty and a 2.8% drop nationally.

The good news is that demand for New Zealand’s primary sector exports are up on last year, largely on the back of sustained demand from China. The ANZ Commodity Price Index shows that forestry export prices eased in June and July, with dairy prices holding up better. Infometrics estimates the district’s 2019/20 dairy pay-out to be around $380m, which is $49m higher than 2018/19.

As a result of the contracting economy, the annual average number of Jobseeker Support recipients in Rotorua jumped 20% in the June 2020 year, having been on a steady upward trend since the March 2019 quarter.

House sales in the district slumped 13% in the June 2020 year, falling below their 10-year average for the first time since 2015. With fewer properties on the market, house prices rose 9.1%pa in the June 2020 quarter. Residential consents grew by a moderate 5.7% in the June 2020 year on the back of a strong September 2019 quarter. Non-residential consents remain elevated but are down 4.0% in the June 2020 year following a very strong 2019 year.

Overview of national economy

The New Zealand economy took a severe hit during the June 2020 quarter, as the COVID-19 pandemic saw the country locked down at home for around four weeks at Alert Level 4, before a rapid move down the Alert Levels to Level 1 in early June. The economy has endured a dramatic shift in focus, from life support at Level 4 to an adrenaline rush at Level 1. Yet the immediate economic ramifications are clear to see – economic activity has fallen, nearly 50,000 Kiwis lost their jobs, businesses struggled to cope with lower earnings, and incomes were reduced. The June quarter likely represents the largest single hit to the economy, but the economic scarring and restructuring will continue to occur over the coming years. New Zealand is not out of the woods yet.