Speakers Report
Nick Robertson - Economist at BERL
Nick gave us rundown in layman's terms of what the outlook is for the NZ economy following the Covid19 shutdown.
In a nutshell, the next two years look a little rough...to say the years.
The worst recession since the great depression!
With the borders closed for some time to come, thousands of businesses reliant on tourism and imported labour will continue to suffer. This is also continue to affect hospitality and supporting businesses - meaning continued job losses and increasing unemployment.
Peak unemployment is expected to arrive in around 12-18 months and hopefully a vaccine will be available by then and international borders can reopen and we can get our tourists back. But that's a long wait for these businesses and the local economy won't be enough to sustain them all.
The second wave of unemployment following the wages subsidy ending WILL happen unless the government continues to support these businesses - but the government is not an endless borrowing machine (although it should borrow for a while to support retraining and job creation) but can't support them forever.
Wellington is not so bad as there are many government jobs and supporting industries which are not as exposed to these factors but we can still expect to take a hit.
One of the worst aspects of a recession like this (in fact almost any recession) is that inequality plays a major role in determining who is affected the most. Generally the least able to cope, and lowest paying jobs, are the worst affected. This is certainly playing out today as we see food banks struggling to keep up with a massive surge in demand.
Rising negative social impacts will see a surge in demand for support services.
The message is generally - hang on to your hats - it's going to be a tough ride for the next couple of years but we should start to see some growth come back after that and it could be a few more years to get back to normal after a vaccine is available.