Lockdown leaves $283 million unspent in Canterbury

27 July 2021 | Research News

New research has found a $283 million difference in retail spending in Canterbury between 2019 and 2020 due to the Covid-19 lockdown.

New Zealanders withheld a significant amount of expenditure that would otherwise have been spent in the economy during the lockdown.

The study looked at the impact of reduced retail spending from the urban Christchurch population on the wider regional economy through the inter-and intra-regional economic effects of the Covid-19 lockdown.

The results reveal how consumer spending variation has far-reaching consequences in employment in connected, but unsuspecting geographies, through the economic value chain.

It translated into 3605 lost jobs in Canterbury, with the majority of those lost concentrated in Christchurch (3398) followed by Ashburton (62) and Timaru (40).

Covid-19, the effect of lockdowns on retail expenditure and displacement effects on the regional economy, was co-authored by Lincoln University’s Dr David Dyason, with the University of New England's Peter Fieger and Riaan Rossouw, from South Africa’s North-West University.

During the strict lockdown regime, overall retail spending declined substantially.

"The results of the research reveal how changes in spending habits have a considerable effect on economic activity, jobs and income levels, propagated through the value chains and beyond territorial boundaries to industries that support the retail activity," Dr Dyason said.

"The place where the spending occurs represents the final destination of the transaction, and one tends to forget how it impacts the economic activity during earlier value-adding activity, such as primary production, located elsewhere," he added.

The research report stated while there was some additional spending evident in the form of pent-up demand immediately after the cessation of the lockdown, "the economic impact of a significant amount of 'unspent' money during the lockdown remained months after the lockdown ended".

It remained up for debate if this represented an uncertainty premium for consumers within the economy, which was being saved or kept for a proverbial 'rainy day', and could potentially re-emerge.”

Alternatively, it could also be used as deposits or down payments for residential property ownership.