Addressing the million-dollar (maybe more) question: are we heading into a recession?
The possibility of a recession is nationally topical, as business owners all over New Zealand have become all too aware of supply-side constraints and increasing financial pressures. Consumer confidence is nearing record lows after falling to -63% in June (as reported by the latest ANZ Business Confidence Survey) and living costs continue to grow alongside high inflation and interest rates.
On the Kāpiti Coast, the Economic Development team has revealed that businesses are most concerned about labour shortages (compounded by COVID19-related absences), cashflow issues from disruptions and temporary closures, and insufficient COVID19 leave support. Regional MarketView data shows that the hospitality and retail sectors have been the hardest hit.
Yet it’s not all bad news. The border reopening will increase valuable tourist spending, with Air New Zealand’s network already back to 80% of its pre-Covid activity. A low unemployment rate of 3.2% means New Zealand is well positioned to respond to decreased economic activity.
Kāpiti has also maintained a robust GDP growth rate of 7.4%, higher than both the Wellington Region and national average of 5.1% and 5.2%, respectively. The impact of Transmission Gulley on this growth will be eagerly anticipated in the next quarterly report, due August 19th. Ultimately, many overlapping factors mean the timeline and outcomes of economic change are difficult to predict.
Regardless of when we can expect it, a slow-down in economic activity may be a necessary evil to curb inflation. New Zealand economist Tony Alexander compares a recession to a bushfire, needed to clear out the old debris that could serve as fuel for a greater blaze in the future. Our economy is a means to an end, used to provide quality standards of living, well-being, and opportunities for people to pursue the lives that fulfil them. Recessions can enhance long-term outcomes by filtering out poor economic practices and building a stronger future.
Chamber Co-Chair Monique Leith says the prospect of a recession can understandably cause feelings of worry or concern, but businesses should instead view it as an opportunity to interrogate and enhance current business practices and methodologies and come out stronger on ‘the other side’.
“While the specifics are uncertain, we can be sure that change will come. Redirecting our focus towards building resilience in local businesses will help us to stand firm in tumultuous economic conditions. Honing strategies for clarity, connection, and creativity will be vital to bolstering business strength. Channelling energy into marketing may seem like a daunting diversion from survival tactics, but a clear and engaging message for your audience will help people connect with your brand” she says.
“Ensure your core offers remain current in changing times, promote your points of difference, and keep your content personable and consistent. Don’t underestimate the power of relationship currency; invest in your clients by identifying their needs and using technology to stay connected. Fostering a resilience mindset that encourages innovation, creativity, and an entrepreneurial spirit will help your business navigate and adapt”.
Perhaps most of all, it is vital to look after yourself: healthy businesses need healthy leaders. The Kāpiti Coast Chamber of Commerce will be running a series of events to promote mental health awareness week at the end of next September, addressing important areas for sustainable self-care such as social connection, nutrition, sleep, and exercise.