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Why Supporting Local Matters and Why it Can Help Save Christchurch Jobs

We’re in unchartered territory Christchurch. This is why supporting local matters now more than ever.

You’re being asked to spend local. Economist Dr David Dyason explains why this is important and how it can save Christchurch jobs.


What do we expect to happen to the Christchurch economy?

We expect the largest negative impact on the economy to be in the second quarter of this year, coinciding with the lockdown period. If we are in a position to move out of total lockdown and the economy can operate in more ‘normal’ conditions, we expect the third quarter of 2020 to continue to have negative growth, however, this all depends on how quickly we can get some level of confidence in the market.

This is uncharted territory isn’t it?

The negative economic impact is expected to be significantly larger than the global financial crises of 2009, our last recession in New Zealand.

What normally happens after a disaster like this? Do people stop spending.

Prior to recessions, the market is buoyant, companies expand, and consumer spend with growth in most areas of the economy. A recession has the opposite effect with every role-player tightening pockets and uncertainty increasing. We have also seen a similar trend in the global financial crisis with initial reduction in spending, however consumers were able to quickly respond and increase expenditure

Surely Government investment in new roads and similar will get us back on our feet? Like after the quake?

These investments are important job creators and enablers for the economy to operate. However, when you dig deeper into the beneficiaries of these projects, they benefit a slightly different group of industries. Consumer spending benefits the retail and hospitality industries, which are also those industries that benefit from visitor (tourism) spending – which is likely to be under significant pressure with no international travel at this time.

Some businesses stayed open didn’t they? Won’t that insulate us?

During lockdown essential services continued to operate, but this accounted for only around 30 per cent of economic activity.

OK. So which businesses are most at risk?

The businesses that had to shut down as a result of the lockdown and who employ the majority of people within Christchurch, including construction, non-essential manufacturing, non-grocery retail, hospitality and accommodation. In the longer term, businesses highly reliant on tourism and visitor spending will be at high risk as travel is restricted.

Right. So what we can we do now and how will that help?

Consumers represent the largest role-players within our economy, accounting for 60% of economic activity. Their spending impacts on various industries, including retail and hospitality, while this spend indirectly benefits other industries within the economic value chain. This means that spending in one area of the economy has an up-and down-steam impact.

Everyone’s telling us to buy local. Does it really make a difference long term?

The phrase ‘buy local’ requires clarification. Economically it encourages activity where the value chain activities promote and benefit opportunities within the regional economy. The longer the money stays within a geographic area (Canterbury), the higher the return or multiplier within that region.

Not everyone will be able to afford to spend extra though will they?

Of course, and I full appreciate that. Some households will be able to spend more than others and responsible spending is important here.

However, some households could have been in a position to save money during the lockdown period, as they could not spend the money on things they would normally. Spending those savings within the next six months will go a long way in recovery and supporting industries and ultimately saving jobs.

If people who can afford it spend an extra $100 a month in local businesses, what happens?

We could save jobs. Spending now will save jobs which will be easier that creating new jobs later.

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