Business journalist Daniel Dunkley is a regular opinion contributor.

OPINION: After the lengthy shutdowns of 2021 and 2020, the feeling of missing out on restaurants, festivals and big events ignited a fire in New Zealand’s economy as people left their homes with cash ready to spend.

Now, as Covid-19 spreads across the country, the fear of going out and getting sick is having the opposite effect.

New Zealand is entering a strange phase of the pandemic. On the one hand, some politicians and businessmen are calling for the abandonment of public health measures altogether, arguing that the Covid horse has flown away.

At the same time, large swaths of the population are just beginning to get sick, and the pandemic is beginning to alter our behaviors.

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In recent days, political figures including ACT party leader David Seymour have called on New Zealand to scrap vaccine requirements, QR code scanning and MIQ. The latter was scrapped early for Kiwis by the government this week, although ministers have said warrants, passes and sweeps will remain in place during the omicron peak.

Christel Yardley / Stuff

“Reluctance to go out” is set to hit hospitality hard, according to Infometrics economists.

Among some people, there seems to be a sense that businesses and livelihoods will return to how they were once Covid restrictions ease. That without the burden of vaccine requirements and limits on gatherings, sectors like the hospitality industry will be booming again, and we’ll all be filling bars and restaurants like the good old days.

However, international evidence suggests that Covid outbreaks are inhibiting consumer spending and making us all more cautious. That the fear of catching the virus while on the move makes us all more hesitant and less likely to spend big.

In New Zealand’s new post-elimination reality, human behavior, rather than government restrictions and mandates, will have a greater effect on consumer spending as long as this pandemic and its recent outbreak continues.

Some economists have even given this phenomenon a name, “HOGO” – pandemic reluctance to exit. This hesitation in turn affects business confidence, prolonging the cycle and rattling the entire economy.

One of the first cases of HOGO was reported in early 2020 by the University of Copenhagen. Researchers from the university found that levels of consumer spending had fallen by similar levels in Denmark and neighboring Sweden, despite Sweden having no lockdown and Denmark applying strict restrictions.

The researchers concluded that fear of the virus inhibits consumer spending, especially among the elderly, who contribute the most to economic activity and hold the bulk of purchasing power.

One of the academics behind the study told me in 2020 that Covid in the community is causing people to change their normal habits and “stay home”.


“In this new environment, consumer activity will be heavily influenced by our fear and hesitation,” says Daniel Dunkley.

Meanwhile, a 2020 Harvard study monitoring private sector economic data found that lifting Covid restrictions early in some states had less impact on economic activity than expected.

The researchers found that states that reopened earlier saw no benefit, as other states remained locked down. The study also found spending plummeted just before the shutdowns.

It’s the New Zealand equivalent of 2020, and our national epidemic is just beginning.

Data on New Zealand consumer behavior is limited, but ANZ’s weekly card spending figures show the value of hospitality spending is down from a year ago (when Auckland was level alert three and the rest of New Zealand was at level two). This is despite the rise in inflation over the past year, which indicates a larger decline in the overall volume of spending.

Infometrics economists expect HOGO to hit hospitality hard.

“Hesitancy to Go Out (HOGO) is likely to further reduce hospitality expenses in the event of an Omicron outbreak,” the group predicted in January.

“Fewer people will be willing to travel and eat in catering services, given the increased risk of coming into contact with Covid-19 and limits on the number of sites.”

According to Infometrics, HOGO is expected to lead to lower economic participation, while restaurant activity could drop 25% from normal levels if the country follows international trends. The drop here could be even steeper, with Covid outbreaks relatively unknown to most New Zealanders.

With the Omicron outbreak set to peak next month, HOGO could have a limiting effect on New Zealand’s economy for some time as people expect the worst of the outbreak and choose to work from home and delay weddings, parties and get-togethers. -UPS.

While some of the arguments for removing some post-Omicron Covid restrictions may be valid, don’t expect consumers to act as usual.

For Kiwi businesses, it won’t be like coming out of New Zealand’s “Covid Zero” lockdown, or like 2019.

In this new environment, consumer activity will be greatly influenced by our fear and hesitation. Confidence will return when the fear is gone and people start to feel safe again.