Importance of Tourism to New Zealand

nz-short-term-arrivalsGiven the growing importance of tourism to the NZ economy, there is a risk that the latest earthquake could adversely impact visitor arrivals. However, looking at the 2010/11 earthquakes, the long-term impact appears to be limited (see graph from ASB Bank).  It is estimated that the impact on visitor arrivals is likely to be small in comparison to the previous quakes, though Wellington through to North Canterbury are likely to see a reduction in visitors. Spare a thought for  Kaikoura, the whale-watching capital, which has experienced a lot of damage and currently has no access routes.

Unlike other sectors  which produce material goods, tourism encompasses a range of industries and is based on characteristics of the consumer, rather than what is being produced by the producer. Feeder industries into the tourism sector include:

Accommodation – Transport – Retail Trade – Food and Beverages – Car Hire – Tourist Sites

Tourism spending – year ended March 2016

  • Domestic = $20,213m ($15,361m spent by households $4,852m spent by business and government)
  • International = $14,486m ($2,747m from international students)

Total = $34,699m

One significant point from the data was that tourism revenue surpassed export revenue from dairy products.

Contribution of Tourism to Gross Domestic Product (GDP) 

  • Direct contribution – $12,873m = 5.6 % of GDP.
  • Indirect Contribution (supplying of goods and services to tourism sector) – $9,815m = 4.3% of GDP
  • Total contribution = $12,873m + $9,815m = $22,688m = 10% of GDP

Employment – the tourism sector is quite labour intensive, with:

  • People employed 188,136 = 7.5 % of total employment.
  • People indirectly employed = 144,186 = 5.7% of total employment.
  • Total 332,322 = 13.2 % of total employment


Source: Parliamentary Library – Monthly Economic Review  November 2016

Earthquakes: Napier (1931) and Christchurch (2010/1) economies.

There is an interesting piece in the latest issue of Asymmetric Information – quarterly publication of the New Zealand Association of Economists – about the economic impact of the 1931 Napier earthquake (see photo) and how it can be applied to that of Christchurch. Written by NZIER economist Shamubeel Eaqub, the outlook for the Christchurch economy is more positive that what the media hype would suggest.

The Napier earthquake led to a 45% decline in regional GDP. The Canterbury quake caused approximately NZ$15bn or 50% of regional GDP. But after 1931 the region picked up strongly, with a massive reconstruction effort and flood of regional migration. In Canterbury two industries that are imperative for the Canterbury economy that were on the whole unaffected were factory production and agriculture. Ultimately all earthquakes provide the stimulus to further infrastructure development. Although tourism is a much bigger part of the Canterbury economy than that of Napier, other countries haven’t experienced major downturns in their tourism industries. Following the tsunami that affected Sri Lanka tourist numbers fell 43% in the first 2 months. However by 6 months tourist numbers were at normal levels and at a record high in 2010.