COVID-19 has affected Australia and New
Zealand in many ways. National governments have spent billions on economic
relief packages, unemployment continues to rise, and households and businesses
remain scared to invest in their future. The virus has disrupted consumer
demand, affected business supply, and reduced consumer sentiment significantly.
Weakening demand can be seen across most industries, with only a few sectors
managing to thrive in the current economic climate.
According to the report from IBISWorld,
households have scaled back discretionary spending due to fears of rising
unemployment and economic uncertainty. In addition, businesses have abandoned
or postponed investment in new productive capacity in order to retain cash and
ensure liquidity during uncertain times. Supply chain disruptions are affecting
domestic Australian and New Zealand markets, hindering international business
activity, and dampening economic growth.
The most affected sectors in Australia and
New Zealand include Accommodation & Food Services; Transport, Postal &
Warehousing; Rental, Hiring & Real Estate Services; and Arts &
Recreation Services. Despite stronger restrictions in New Zealand during the
early days of the virus, the economic impact has been slightly lower due to
reduced COVID-19 numbers. The impact of COVID-19 has also affected the Mining
and Agriculture, Fishing & Forestry sectors, although in these cases, Australia
has fared slightly better than New Zealand.
The reality of household spending during
the pandemic is sobering, with people spending much less and habits changing in
line with social distancing and isolation recommendations. The situation is
affecting everyone, with some households struggling to make ends meet and
others choosing not to buy new household items. According to an Access Media
International study, over 50% of affluent global households are
"profoundly impacted" by the virus, with 35% of households unlikely
to undertake any air travel in the next two quarters.
Overall consumer confidence in Australia
has dropped considerably in 2020, with numbers dropping even before the
pandemic due to the bush fires. According to the last few ANZ-Roy Morgan
Consumer Confidence survey reports, consumer confidence dropped from around 112
to 66 points before recovering somewhat to its current level of 91.6 points.
Since recovering from its March lows, consumer confidence has decreased by 6%
from mid-June levels. Spending habits are also changing on both sides of the
Tasman, as social distancing continues to push many consumers to online
channels for shopping, communication, food purchases and working arrangements.