Wairarapa Times-Age E-Edition

Economic stats don’t tell the full covid story

When New Zealand was about to go into lockdown last month, Prime Minister Jacinda Ardern supporters quickly moved to try and head off negative overseas commentary by posting selected stats on social media.

They used data such as unemployment, GDP, and covid-19 deaths per million people and compared New Zealand’s performance with the likes of Britain and the US.

The idea was that the comparisons could be used to defend against criticism of the elimination-by-lockdown strategy the government used.

In hindsight, that offensive is supported by Thursday’s GDP figure, which showed the domestic economy was absolutely humming before the Delta variant outbreak here that threw us back into lockdown.

GDP rose 2.8 per cent in the June 2021 quarter — well ahead of market estimates — and culminated in a 17.4 per cent bounce from the same quarter last year, after the first lockdown-affected period.

The big question is, will we see the same bounceback in economic activity post this current lockdown?

Some economists and major retailers such as Briscoe Group are optimistic, albeit with a big caveat of how long Auckland will remain constrained above level 2.

“Given that the economy was running hot going into the lockdown in August, the prospect of another V-shaped rebound becomes more likely,” Westpac chief economist Michael Gordon says.

The market is starting to re-factor in interest rate rises, increasing the odds of the Reserve Bank opting for a 50 basis point hike on October 6.

The counter to all this is the factors that came into play earlier this year, such as the global supply chain challenges and chronic labour shortages.

Those issues will hinder companies’ ability to ramp up production, make investment decisions and implement growth strategies.

Alongside that is the fact that the cold data reflected in the GDP number and unemployment stats don’t reflect the human cost of these past five weeks and the toll on hospitality and tourism

operators especially.

More than 18 months into the global pandemic, many Auckland businesses simply can’t pivot any further and are finally making the heartfelt decision to shut up shop for good.

As one tourist operator told the NZ Herald, it has been death by a thousand cuts.

The same goes for the hospitality sector, with no one able to get any clear guidance from the government about operating economically at different levels and the key question of what happens postvaccination.

Finance Minister Grant Robertson appears to be relying on the same sort of rebound from this lockdown as experienced last year.

But he must be aware that the economic environment is different due to the supply chain and labour market difficulties and the fact that a lot of the rebound was fuelled by fiscal support.

At the same time, customer demand has changed with more people working from home.

Like most things covidrelated, only time will give us the definitive answer to these questions.

OPINION

en-nz

2021-09-18T07:00:00.0000000Z

2021-09-18T07:00:00.0000000Z

https://times-age.pressreader.com/article/281792812161076

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