February 2022 Newsletter


                        
  Newsletter - February 2022


                It’s been another month of constant change for the New Zealand economy, with the Omicron outbreak now seeing tens of thousands of cases a day. The global outlook has darkened considerably with the Russian invasion of Ukraine, and this month Principal Economist Brad Olsen examines at a high level what the implications might be for the New Zealand economy. 
Senior Economist Rob Heyes digs into how the labour market is changing and recovering, and what broader trends across different demographics means for the New Zealand employment outlook.
Our updated Regional Economic Profiles and Sector Profiles are also now available, and Brad details what our data shows about the economic effects of COVID-19 on local economies and industries over the first year of the pandemic.
It’s been a busy month for the Infometrics team; last week we published our latest Quarterly Economic Monitor for the end of 2021. As Brad’s media release outlines, regional economies showed a determined bounce back at the end of the yar, but Omicron looks set to disrupt that growth. 
Finally, we round out the February 2022 newsletter with our Chart of the Month, where we analyse the additional weekly costs of essentials that Kiwi households are facing.
              
            
                Articles
            
        
                                Russian invasion to increase prices, global uncertainty
                            
                        
                        The global security picture has been upended after the Russian invasion of Ukraine last week, with heavy fighting across all invasion fronts, substantial sanctions on Russia by Western countries, and Russian President Vladimir Putin ordering the country’s nuclear deterrence forces “to a special mode of combat duty.” Global tensions are ratcheting higher, with increased uncertainty about the global economic outlook. Prices for energy products, farm inputs, and metals have risen, and financial markets are volatile as the Russian financial system feels the pressures of isolation.
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                                How the labour market recovery is taking shape
                            
                        
                        The New Zealand labour market has recovered better than anyone expected from the economic contractions brought about by COVID-related lockdowns. In fact, with a record low unemployment rate of just 3.2%, the talk now is of an overheated economy with very little spare capacity in the workforce
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                                Examining the local and industry effects of the first year of COVID-19
                            
                        
                        Recent Infometrics data provides the first comprehensive analysis of the impact of COVID-19 on different industries and local areas across New Zealand. Our regional and sector data, which sits behind our Regional Economic Profiles and Sector Profiles, was updated in early February 2022 with estimates for the year ending March 2021. Our analysis shows a considerable shock to parts of the New Zealand economy, and the weakest period of employment activity since the Global Financial Crisis (GFC).
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                                A determined but short-lived bounce for regional economies at end of 2021
                            
                        
                        Economic activity staged a comeback in the December 2021 quarter as Delta restrictions were gradually eased at different times across the country, with mixed results seen across regional economies. Infometrics’ December 2021 Quarterly Economic Monitor shows economic activity rose 2.8%pa in the quarter on provisional estimates, with delayed demand after the Delta restrictions being unleashed, and a reasonable summer being enjoyed across many local economies.
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                                Chart of the Month: The rising cost of essentials
                            
                        
                        The cost of living is rising at an accelerating rate, leaving household budgets squeezed as wages rise at a slower pace. But just what do the increase in prices mean at a dollar level for Kiwi households? Our February 2022 Chart of the Month seeks to examine the additional cost each week that Kiwis are paying for some of the essentials.
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