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Weekly IC Soundbites
Weekly Economic Bites – 13 April 2020
TUHOE - TE URU TAUMATUA
Prepared by the Investment Committee
Commentary on the covid.19 environment for the Board and Executive of Tuhoe Te Uru Taumatua.
Border controls could be in place until a vaccine is ready, which has been estimated as 12 to 18 months away. Border measures are unlikely to be relaxed unless other countries, as well as New Zealand, managed to eliminate the virus. This means that international tourism as a revenue source will disappear from NZ for 2020 and may not return until the Summer months at the end of 2021 at the earliest.
The impact on our economy will be significant. Total annual tourism expenditure is $40.9bn, or $112m per day. International tourists spend $17.2bn of that or $47m per day. The balance is NZ domestic tourism of $23.7bn, or $65m per day. It may surprise many to know that domestic tourism has the larger revenue share. With NZ tourists also unlikely to travel offshore over the coming period, effective marketing to this group will be crucial. However, tourism will be an increasingly competitive market as more households will have reduced budgets for travel and recreation.
Businesses getting ready for re-opening
The decision to move to Alert Level 3 at the end of the designated lockdown period of 28 days will be made on April 20th.
For business operators, the Prime Minster has indicated that the following three factors will be crucial:
· Working in an environment that still ensures social distancing
· Your ability to supply the Government with contact-trace information for all the customers/employees you work with
· Whether your business will need Personal Protective Equipment
The balance of 2020 is likely to be a challenging operating environment. Businesses that plan early and implement their updated trading strategy in a timely manner will be best placed to endure.
Your personal finances
Many households will be in for a tough economic time over the next two years. Whilst it is ideal to have financial reserves, particularly going into a bit of a crisis, the reality is that most people do not, as modern life in general is expensive. This is however not the time to get caught up on what may have been. The reality is that we can only look forward. The majority of people will take a financial step backwards for a while before eventually moving forwards again. You are definitely not alone. This like all seasons shall eventually pass.
The economic environment we are entering is challenging but is beyond our individual control. We encourage all to make use of the support services available. And if you have a mortgage or are carrying credit card debt, talk to your bank if necessary.
And importantly, talk amongst your household. The current situation is unprecedented during most of our lifetimes. Share and be open. There is no disgrace with what is going on.
We will all probably need to be more prudent with our spending at the moment, so some good old fashioned budgeting will be necessary. We do need to keep in mind that one person’s spending is another person’s income but it will be important to set priorities.