3.2 Economic Impacts of Covid

ECONOMIC IMPACTS OF COVID

Further to the pestle analysis, the economic outlook has obviously been impacted by Covid-19. The PESTLE analysis (Appendix 5) will ensure the expansion into NZ is aligned with the external forces affecting the business landscape, with Stella reacting appropriately to achieve their brand objectives (Vignali, 2006).

The Economic impacts of Covid:

• In 2019, actual GDP per capita was NZD $38, 993 (World Bank, 2020). GDP shrunk by 12.2% between April and June 2020 as Covid closed borders and country went into lockdown (Jones, 2020). • Fall in GDP saw household income fall and therefore spending reduced by 12.1%. Tourism fell by 96.8% due to the closure of borders, a significant impact on the economy as tourism contributes 5.5% to GDP.

• Unemployment rate increased to 5.3% in Q3 of 2020 (highest jobless rate since 2016), from 4% before the pandemic (World Bank, 2020)

• Inflation rates fell to 1.4% in Q3 of 2020 amid the pandemic, below market expectations of 1.7% increase. Consumer Price Index (CPI) increased by 0.7% quarterly (World Bank, 2020). Volatile consumer confidence: Globally consumers are cautious which has caused a general shift to slower growth rate this year for the fashion industry.

POST COVID OUTLOOK New Zealand was announced Covid free on the 9th July; early closure of borders and lock down controlled the pandemic and prevented it from spreading (Jones, 2020). This was assisted by effective communication and public compliance. New Zealand's economy grew by 14% between July and September as a result, reflecting their stable, transparent and durable economy (Wilthers, 2020).

Since recovering from Covid, economic confidence and consumer sentiment has improved, and business demand increased (IBISWorld, 2020). Consumer spending has remained constant since September since border restrictions are still in place.