The short-term outlook – ‘could be worse’

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About 60 people crammed into a restaurant in Cromwell last Wednesday morning, despite the ice and cold.

The drawcard?

The Central Otago District Council’s plan for the Covid recovery.

At the monthly Business Breakfast, people wanted to know where the economy is headed and what the council is doing.

Helpfully, the information is all on the economic development part of the council’s website.

Overall spending is back at pre-lockdown levels.

The weeks of low economic activity seem to be behind us.

One local business told me they’ve just had a great month lockdown has turned into June sales.

Behind the overall figures are some rough spots.

Some tourism businesses continue to be down.

International visitors account for 23% of tourism spending in the district, so some losses are inevitable.

A big issue is labour.

Right now, there are thousands of unemployed in Queenstown, a rise in jobseeker numbers in Central Otago, and predictions of roughly 10% unemployment nationally.

Soon, though, the fruit industry is going to need hundreds of people.

International travellers would usually help fill those roles, but it isn’t clear what will happen in the 2020-21 season.

Council, industry and central government are working on the size of the problem and how to solve it.

Another issue is starting to worry me: what will happen with asset values and debt?

Predictions are for a decline in house prices and investment.

It won’t be a problem for people with low debt who can ride it out.

The trouble will come from those who are highly indebted.

Only a few small shifts can push a business into difficulty.

For individual businesses, the recovery is likely to be uneven.

Keeping on top of the business workflow, labour needs, etc will be important.

We can help by staying in touch with each other.

The district has an active, energetic business community and the council is working hard to broker connections locally and nationally.

The short-term outlook?

“Could be worse.”

It’s not a great slogan, but I think that’s what’s ahead.