A Government report is warning that the Cook Islands economy may be stung by the forecast recession in New Zealand.
The Half Year Economic and
Fiscal Update (HYEFU), released to Cook Islands News a week ago, paints an
optimistic picture overall, with growth projected to be 11.8 per cent for the remainder
of the 2022-23 financial year, and 6.8 per cent for the following year.
However, the HYEFU also notes
that “in response to inflation, the Reserve Bank of New Zealand (RBNZ) has
acted aggressively and is now predicting a short recession which may impact on
visitors to the Cook Islands”.
Businessman Fletcher Melvin,
of Island Craft, said this forecast was “actually quite positive”.
“The RBNZ had previously
predicted a hard recession, so it sounds like we should be able to make our way
out of it,” Melvin said.
“We need to maximise the
tourists that we have.”
Melvin said it was important
that businesses built up cash reserves during this period.
“But there are lots of
positive aspects on the horizon, the supply chain is opening up, and is
expected to return back to normal settings early (this) year,” he said.
“Recessions are largely driven
by business and consumer confidence, so businesses need to carry on with their
Cook Islands Chamber of
Commerce chief executive Rebecca Tavioni said businesses needed to focus on
what they can control, rather than what they can’t.
“Our operators will be likely
feeling the pinch at the margins, but we can control the way we operate. It’s
about not pricing yourself out of the market,” Tavioni said.
“The lessons we learned during
the challenges of Covid-19 should prepare us for the coming challenges.”
Tavioni said some businesses
were already focusing on the local market during the downtime, offering special
deals and “staycations”.
“The competition isn’t each
other in the Cook Islands, it’s Fiji, Australia and Bali. We need to remain
appealing for the price-conscious traveller,” she said.
“New Zealanders and
Australians still want to travel and get some rest and relaxation. The
challenge will be ensuring they come here for that.”
Tavioni said from a chamber
perspective, this year’s Budget would be interesting.
“We’re keen to see what it looks
like and how optimistic it might or might not be,” she said.
Robert Skews, of Island
Hopper, said a recession in New Zealand would affect “the lower end of the
market” to a greater degree.
“I guess the concern is that
until the flights from Sydney and Hawaii come online, we’ve got all our eggs in
one basket,” Skews said.
“It’s the high airfare prices
that have been the killer, but there are indications that these are going to
Skews said he would be
surprised if it returned to pre-Covid-19 levels, where the island recorded more
than 180,000 visitors in a year.
“Then again, the question is
whether we want it that busy, as there were big pressures on the environment
and infrastructure,” he said.
Skews said many businesses
would struggle up until March, but he was optimistic that things should right
themselves in April and beyond.
From May 20, Hawaiian Airlines
will launch a Rarotonga to Honolulu flight, while Jetstar’s flights between
Sydney and Rarotonga will resume from June 29, 2023.
“That will broaden our
customer base,” Skews said.
Cook Islands Tourism Industry Council president Liana Scott, of Muri Beach Club Hotel, said there might be an upside to the recession.
“I think any recession in New Zealand will
actually improve travel to the Cook Islands,” Scott said.
suggest that the long-haul market gets affected more than the short, but this
is just my opinion.”