COVID-19: Navigating uncertainty through scenario modelling on a regional level
Regional forecasts and scenario analysis across New Zealand
Deloitte Access Economics has developed a series of six regional reports - one for each region in New Zealand with a Deloitte office. These bespoke reports provide regional forecasts based on three possible COVID-19 scenarios.
The reports assess how individual regions could be affected by COVID-19 based on assumptions made under each scenario as to the pace and timing of the global recovery, short-term domestic and regional economic impacts, and the effectiveness of health and fiscal policies in containing the outbreak.
About the forecasts
These reports were generated using our newly developed in-house regional forecasting model for New Zealand. The forecasts include regional GDP, employment and unemployment forecasts by sector and region, along with scenario capability.
Auckland is a hub for financial and professional firms, with exposure for these sectors ~2% greater in Auckland than the New Zealand average. In the financial and professional services sector, many firms have been able to continue with operations in a remote manner, and discretionary costs such as travel have decreased due to the virus. Going forward, this new, highly digital way of working will present many opportunities.
Waikato has high economic exposure to agriculture, forestry and fishing. Given that agriculture was deemed an essential business through the lockdown period, and is the largest portion of the sector, this places Waikato in a favourable position going forward.
Bay of Plenty
Bay of Plenty has 10% economic exposure to the agriculture, forestry and fishing sector compared to the New Zealand average of 6%. The agriculture sector was deemed an essential business during the lockdown period, and has been one of the most resilient sectors during COVID-19. Although forestry and fishing had weak exports, agriculture makes up a majority of the sector and therefore presents opportunities for recovery going forward.
Wellington is a hub for professional and financial firms, with exposure for these sectors 3% greater in Wellington than it is nationally. Public administration is also 8% higher than the NZ average. In the financial and professional services sector and public administration, many firms/Ministries have been able to continue with operations in a remote manner, and discretionary costs such as travel have decreased due to the virus. Going forward, this new, highly digital way of working will present many opportunities.
Canterbury is highly exposed to the manufacturing and construction sectors. Given that much trade has been suspended or ongoing with severe restrictions in place and a disrupted supply chain, this will present a challenge for the region. On the other hand, the Government has allocated another $3 billion for infrastructure in the latest budget which will support recovery.
Otago is highly exposed to the accommodation and food services sector, with an economic exposure 4% higher than the New Zealand average. Many businesses in this sector will struggle to survive beyond the wage subsidy scheme, and those that do will have a long recovery having to deal with constant restrictions.