Population growth and economic recovery are on the 2025 horizon for Southland, but tourist operators will continue to "suffer for some time", according to a new economic report released today.

Infometric’s 28-page document, Southland Region post-Covid Scenario Analysis Report, has been welcomed by Great South chief executive Graham Budd, who said it revealed a positive outlook for Southland, post Covid.

The report was commissioned by Great South, the Southland regional development agency, and builds on a baseline Covid impact report prepared in mid-2020.

Advertisement: Creation Signs

Advertise on the Southland App

The report author is Nick Brunsdon, who says in his executive summary that Southland performed strongly during Covid lockdown, has a steady outlook for employment, and most industries should be recovered by 2025 “under the medium scenario”.

The report forecasts a further decline in tourism spending this year as domestic visitors respond to the expected recession by tightening household budgets.

“A pivot towards domestic tourism, hibernation or shut down are the only real options facing tourism operators,” the report says.

It also details challenges faced by the Southland labour market and states that achieving “critical mass” of population “would help but is unlikely”. 

“Maintaining Southland’s population size over the long term may be a more achievable goal,” the report says.

More economic change is in store for Southland in the medium and long term, with risks including increased stringency in environmental restrictions, the likely closure of Tiwai Point aluminium smelter in 2024 (affecting 2300 jobs) and the length of time it might take to absorb job losses into the labour market.

However, Southland was expected to recover well from Covid, due to the strength and stability of the primary sector and food manufacturing industries. But tourism, previously an important economic contributor, was “expected to suffer for some time”.

The report outlines three recovery scenarios. At worst case, Southland should be 70% back to normal by 2025 and in best-case it would be 100% back to normal economically.

The report also predicts Southland’s population will increase to between 108,800 and 111,300, up from the pre-Covid population figure of 102,600. 

Advertisement: Hotspot Fires and Installations

Advertise on the Southland App

Mr Budd said while initially the economic outlook was pessimistic, the report showed that during last year’s level three lockdown, Southland was less impacted overall than the rest of New Zealand, with key industries and the primary sector able to continue operating. 

“In that sense, what the report shows is heartening.” 

However, Mr Budd said the impact of a lack of international travellers on the tourism and hospitality sector had to be acknowledged.

“An increase in domestic tourism has helped, but in areas like Te Anau and Fiordland that have traditionally relied heavily on international visitors, the impact is severe.” 

Along with the impact on tourism, which Southland is expected to suffer for some time, there would be other challenges ahead for the region.

The report notes labour and skills shortages, and a housing shortage as barriers to full recovery and growth. 

“At this stage we’re seeing quite a strong recovery based on export commodity prices and construction, so I would think the 70% prediction will be well surpassed,” Mr Budd said. 

“Like the rest of New Zealand, we’re finding that a lot of Kiwis who were overseas when Covid hit are returning home. That’s great but attracting skilled migrants into the region will also be essential.” 

Mr Budd said the report, which factors in the continued operation of the Tiwai Point aluminum smelter until late 2024, is designed to assist regional decision making and inform future strategies for Southland. 

“In many ways it reinforces our collective focus on economic diversification, carbon emissions and options for alternative land use,” Mr Budd said.

READ THE REPORT HERE.