Liam Dann: Now the retail rebound begins … or does it?

OPINION:

For Aucklanders feeling worn-out, anxious and depressed there is therapy on the way … retail therapy.

Many businesses will have breathed a sigh of relief this afternoon.

The decision to let Aucklanders go shopping and meet for outdoor gatherings of up to 25, signals the beginning of what many hope will be another economic rebound for the city.

The firming up of November 29 for a likely move to the new traffic-light system offers a red, orange and green light at the end of the tunnel.

But will the desire to hit the mall outweigh fears of Covid in the community?

When the bars do finally open will the reality of the pandemic dampen enthusiasm to party?

There are no guarantees that we’ll see the same strength of post-lockdown rebound this time, economists say.

What we don’t yet know is how New Zealanders will behave as Delta becomes endemic.

It’s probably the biggest uncertainty facing the economy in the next 12 months, says BNZ head of research Stephen Toplis.

In a report released today Toplis argues that even though economic restrictions are easing in Auckland, the surge in consumer activity may be more muted.

“New Zealand is rapidly headed towards its days of reckoning,” he says.

There were two extreme directions the behaviour could head towards, Toplis said.

“We could collectively accept the risks of operating in such an environment, relish our freedoms and push ahead with economic expansion; or fear could rise aggressively, domestic spending on services could collapse, labour supply could drop and the economy could retrench.”

In reality it would likely be a mix of both, he said.

At this point the business community is banking on Auckland’s highly vaccinated public heading out in force to make the most of any opportunities the new rules allow.

There was plenty of evidence for this pattern of behaviour in the crowds at beaches and parks across the city at the weekend.

But as international experience shows, that can change if the spread of the virus hits alarming peaks.

“There is still a significant chunk of the population which is still not prepared for operating in a world with Covid,” Toplis says.

For most, it was great news the economy would never go back to level 4 lockdown again, he said.

In fact even level 3 looked unlikely to be repeated again as we move into the new traffic light environment.

But the flip side of this was that, for the foreseeable future, we will not be in level 1 settings either, he said.

“For most of the world endemic Covid is now situation normal. New Zealand is yet to experience this phenomenon. We will soon be thrust headlong into a very different world.”

With the rapid rise in daily case numbers now coinciding with increasing freedoms, Auckland looks set to, once again, provide a litmus test for the nation.


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