A word from Bill Kaye-Blake, New Zealand Institute of Economic Research principal economist, based in Bannockburn


Good signs in crystal ball

I wanted to start the year by telling you about the summer’s economy.

How many people came to Central Otago? How much did they spend? How was business?

Unfortunately, there is no data, yet.

All the usual sources Treasury, Reserve Bank, MBIE have not released any numbers about the holiday period.

Very frustrating.

My impression? It was busy, but not as much as some years.

There were lots of bikes on the new trail.

There seemed to be more caravans parked up but fewer boats on Lake Dunstan.

Parking at the shops was fullish but not impossible, and the stores were not chokka.

My guess is the data will show all-right performance but below trend.

What about the year ahead?

Covid, naturally, will still be important. We don’t know where the pandemic is headed internationally, so it’s hard to guess what the local impacts will be.

Lack of international travel looks set to continue for months.

The growth of omicron has raised the risk level.

To support more tourists, we would need to either expand quarantine facilities or create more hospital space to handle quarantine-free travel.

Neither change is on the cards.

Supply chain impacts are ongoing, too.

I’ve been hearing from businesses that they are still facing backlogs in getting supplies from overseas, and there are bottlenecks with domestic supplies of some building materials.

Those issues aren’t keeping the economy down, however.

Many people have told me they are busy and expect to stay that way.

They have customers and orders, and are managing their supply issues.

Consumers seem to have money to spend.

Since they drive 60% to 70% of the economy, that’s good news.

They still have their jobs or their businesses, for the most part.

They can’t spend the money overseas so they are spending it here.

That’s keeping the economy ticking over.

Major sectors in the Central Otago economy should do well.

Power generation will continue to be profitable.

Agriculture continues to expand and has learned to deal with pandemic disruptions.

Construction expects to be busy, although it could be more vulnerable to lack of supplies.

The smaller sectors – transport, retail, warehousing – look to be supported by strong consumer spending.

The year ahead?

I expect it to be a good one for the local economy.

It probably won’t be easy, but it should be profitable.