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Exploring Omicron’s potential economic impact on New Zealand

This report provides a brief overview of selected topics identified internationally as key economic challenges during the outbreak of the Omicron variant of COVID-19.

Release date: 26 January 2022

Exploring Omicron’s potential economic impact on New Zealand

This report provides a brief overview of selected topics identified internationally as key economic challenges during the outbreak of the Omicron variant of COVID-19. Infometrics Principal Economist Brad Olsen draws on selected United Kingdom (UK) and private sector data sources, media reports from New Zealand, Australia, and the UK, and Infometrics analysis.

Our analysis is designed to inform the public and provide initial thoughts to decision makers across New Zealand for consideration. Our findings are not exhaustive.

Key Findings

  • New Zealand’s economic recovery will be disrupted, both due to:
    • Limitations on hospitality and events at Red.
    • Supply chain shocks, high levels of absenteeism, and lower economic participation as people go out and interact less with business.
  • Fewer people will be available to work, with a rough estimate of 12% absenteeism based on 25,000 per day peak cases, and 350,000 isolating at that time.
  • Australian examples show considerable challenges for transport, logistics, and supermarket operations.
  • Supply chain challenges will be exacerbated by sustained high levels of spending focused on supermarkets.
  • Medical supplies, pasta, and toilet paper appear vulnerable.
  • The Leave Support Scheme and Short Term Absence Payment will be important to enable workers to stay home and get paid, and help businesses fund this pay.
  • Economic participation will drop as the Hassle of Going Out (HOGO) morphs into a Hesitancy of Going Out (also HOGO) and contracting COVID-19 or having to isolate.
  • Overseas data shows a 25% drop in restaurant activity from normal levels.
  • Overseas data also suggests there will be an immediate and high demand for tests for households and businesses.