Cost adjustors for Waikato- Greater Wellington Region COVID-19 economic impact Pipiri 2020 www.berl.co.nz Author(s): Nick Robertson, Hugh Dixon, Hannah Riley, Dr Ganesh Nana All work is done, and services rendered at the request of, and for the purposes of the client only. Neither BERL nor any of its employees accepts any responsibility on any grounds whatsoever, including negligence, to any other person. While every effort is made by BERL to ensure that the information, opinions and forecasts provided to the client are accurate and reliable, BERL shall not be liable for any adverse consequences of the client’s decisions made in reliance of any report provided by BERL, nor shall BERL be held to have given or implied any warranty as to whether any report provided by BERL will assist in the performance of the client’s functions. ©BERL Reference No: #6124 Pipiri 2020 Greater Wellington Region COVID-19 economic impact Pipiri 2020 Making sense of the numbers COVID-19 has been a sudden shock to New Zealand and the economy. Unprecedented policies interrupted the normal functioning of economic and social life. This has had a major impacts on the wellbeing of all New Zealanders. As we get on top of the health response, concern is moving rapidly towards the economic dimension. Rightly so, given the depth of the fall in output and its social effects. The recovery from this pandemic will have lasting effects on every region in New Zealand. The pandemic and associated lockdowns have already affected businesses and households, but the ongoing impacts on the economy and wellbeing will persist for years to come. Within this context, Greater Wellington Regional Council is reconsidering its statuary planning documents, including the Long Term Plan and Annual Plan. Business and Economics Research Limited (BERL) considered three scenarios for the recovery based on the health, economic and treatment responses to COVID-19. BERL provides its best estimates across a select range of economic indicators. The three scenarios are: Scenario one – the best case Scenario two – the mid-point Scenario three – the worst case. Each scenario has a different mix of time spent at each alert level, time for a vaccine (alert level one (2021)) to be developed and distributed, allowing for border restrictions to ease and international travel to pick up. The economic impacts are informed by the Treasury 2020 Budget Economic and Fiscal Update and the Reserve Bank economic impacts of COVID-19 containment measures report. The time at each alert level and the economic impact during each alert level for the three scenarios is set out below. The remainder of this executive summary provides the high level economic impacts across a selection of indicators. Early signs are that scenario one is the most likely recovery path and could be improved further with less time spent at each alert level and a trans- Tasman travel bubble. Greater Wellington COVID-19 recovery scenarios Scenario one (Best case) Scenario two (Mid-point) Scenario one (Worst case) GDP reduction Alert level Months % Level 4 1 2 3 37 Level 3 1 2 3 19 Level 2 5 6 6 8.8 Level 1 5 2 - 3.8 Level 1 (2021) 6 9 12 4.8 i Greater Wellington Region COVID-19 economic impact Pipiri 2020 ScenarioGrea oneter – the Wellington best case COVID-19 economic impacts Wellington Region COVID-19 economic outcomes Scenario one (Best case) Population 580,000 Change from 2020 Year Total 570,000 People % 560,000 2020 524,876 550,000 2021 527,271 2,395 0.5 540,000 2022 528,469 3,593 0.7 530,000 2023 533,248 8,372 1.6 520,000 2025 542,984 18,108 3.5 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2030 569,821 44,945 8.6 Wellington region Pre Covid-19 .id Projection Gross domestic product (GDP) Employment Change from 2020 Change from 2020 Year $million Year FTEs $million % FTEs % 2020 30,746 2020 262,783 2021 28,193 - 2,553 -8.3 2021 248,266 - 14,517 -5.5 2022 30,389 - 357 -1.2 2022 246,134 - 16,649 -6.3 2023 32,070 1,324 4.3 2023 257,289 - 5,494 -2.1 2025 34,142 3,396 11.0 2025 268,629 5,846 2.2 2030 38,452 7,706 25.1 2030 288,055 25,272 9.6 Unemployment (Count) Unemployment (Rate) Population Change from 2020 Change from 2020 Year Year % People People % % % 2020 14,100 2020 4.7 2021 18,246 4,146 29.4 2021 6.3 1.6 34.6 2022 16,311 2,211 12.1 2022 5.7 1.0 22.2 2023 15,974 1,874 11.5 2023 5.4 0.7 14.9 2025 15,273 1,173 7.3 2025 4.9 0.3 5.7 2030 14,355 255 1.7 2030 4.4 - 0.3 -6.8 Household income Consumer spending Change from 2020 Change from 2020 Year $million Year $million $million % $million % 2020 21,553 2020 10,878 2021 18,894 - 2,659 -12.3 2021 10,488 - 390 -3.6 2022 20,423 - 1,130 -6.0 2022 11,016 138 1.3 2023 21,553 - 0.0 2023 11,460 582 5.3 2025 22,946 1,393 6.5 2025 11,948 1,070 9.3 2030 25,842 4,289 18.7 2030 13,586 2,708 22.7 ii Greater Wellington Region COVID-19 economic impact Pipiri 2020 Greater Wellington COVID-19 economic impacts Scenario two (Mid-point) Population 580,000 Change from 2020 Year Total 570,000 People % 560,000 2020 524,876 550,000 2021 527,271 2,395 0.5 540,000 2022 529,139 4,263 0.8 530,000 2023 531,935 7,059 1.3 520,000 2025 541,735 16,859 3.2 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2030 566,670 41,794 8.0 Wellington region Pre Covid-19 .id Projection Gross domestic product (GDP) Employment Change from 2020 Change from 2020 Year $million Year FTEs $million % FTEs % 2020 30,746 2020 262,783 2021 26,747 - 3,999 -13.0 2021 241,001 - 21,782 -8.3 2022 30,237 - 509 -1.7 2022 244,790 - 17,993 -6.8 2023 31,599 853 2.8 2023 253,367 - 9,416 -3.6 2025 33,542 2,796 9.1 2025 263,753 970 0.4 2030 37,697 6,951 22.6 2030 282,231 19,448 7.4 Unemployment (Count) Unemployment (Rate) Population Change from 2020 Change from 2020 Year Year % People People % % % 2020 14,100 2020 4.7 2021 21,668 7,568 53.7 2021 7.6 2.9 62.4 2022 19,207 5,107 23.6 2022 6.7 2.0 43.1 2023 18,209 4,109 21.4 2023 6.2 1.5 31.8 2025 16,792 2,692 14.8 2025 5.5 0.8 17.6 2030 14,879 779 4.6 2030 4.6 - 0.1 -1.7 Household income Consumer spending Change from 2020 Change from 2020 Year $million Year $million $million % $million % 2020 21,553 2020 10,878 2021 17,902 - 3,651 -16.9 2021 10,412 - 466 -4.3 2022 20,321 - 1,232 -6.9 2022 10,885 7 0.1 2023 21,236 - 317 -1.6 2023 10,984 106 1.0 2025 22,542 989 4.7 2025 11,599 721 6.6 2030 25,335 3,782 16.8 2030 12,935 2,057 17.7 iii Greater Wellington Region COVID-19 economic impact Pipiri 2020 Greater Wellington COVID-19 economic impacts Scenario three (Worst case) Population Change from 2020 Year Total People % 2020 524,876 2021 527,271 2,395 0.5 2022 529,099 4,223 0.8 2023 531,895 7,019 1.3 2025 538,723 13,847 2.6 2030 560,715 35,839 6.8 Gross domestic product (GDP) Employment Change from 2020 Change from 2020 Year $million Year FTEs $million % FTEs % 2020 30,746 2020 262,783 2021 25,437 - 5,309 -17.3 2021 234,008 - 28,775 -11.0 2022 30,183 - 563 -1.8 2022 244,200 - 18,583 -7.1 2023 30,989 243 0.8 2023 248,283 - 14,500 -5.5 2025 32,532 1,786 5.8 2025 255,586 - 7,197 -2.7 2030 36,276 5,530 18.0 2030 271,322 8,539 3.2 Unemployment (Count) Unemployment (Rate) Population Change from 2020 Change from 2020 Year Year % People People % % % 2020 14,100 2020 4.7 2021 25,298 11,198 79.4 2021 9.0 4.3 92.3 2022 23,275 9,175 36.3 2022 8.0 3.3 71.4 2023 21,837 7,737 33.2 2023 7.4 2.8 59.2 2025 20,142 6,042 27.7 2025 6.7 2.0 43.7 2030 18,077 3,977 19.7 2030 5.7 1.1 22.8 Household income Consumer spending Change from 2020 Change from 2020 Year $million Year $million $million % $million % 2020 21,553 2020 10,878 2021 17,010 - 4,543 -21.1 2021 9,989 - 889 -8.2 2022 20,285 - 1,268 -7.5 2022 10,919 41 0.4 2023 20,827 - 726 -3.6 2023 11,022 144 1.3 2025 21,864 311 1.5 2025 11,571 693 6.3 2030 24,380 2,827 12.9 2030 12,742 1,864 16.1 iv Greater Wellington Region COVID-19 economic impact Pipiri 2020 Contents Greater Wellington COVID-19 economic impacts ............................................................................