July 11, 2020
The Government of the Northwest Territories (GNWT) has released data it has gathered from a March 2020 survey of Tourism operators and a broader survey of NWT businesses in April/May.
The development of a comprehensive economic recovery plan will require planning and strategic investment. Moreover, it will require a foundational understanding of the economic status and challenges facing the NWT’s industry partners and its business community.
As the Government of the Northwest Territories adapts to govern and deliver its programs and services in the “new normal”, it is also transitioning resources and administrative structures to lead and facilitate a full and permanent economic recovery.
To inform, in part, the work of the Business Advisory Council, three surveys have been administered by the Department of Industry, Tourism, and Investment since March 2020: NWT Tourism operators in March; the NWT Business Community in April/May; and NWT residents (consumers) in June.
While the data from these surveys has been made available to varying decision-making tables, it is primarily intended to be considered and interpreted collectively.
Survey Findings – Overall
The economic implications of the COVID-19 pandemic were most heavily felt during April and May. Had lockdown measures continued into the fall, more than half of business respondents said they may have had to close their operations permanently.
Most notably, 74,000 tourists were expected to visit the NWT between January and August 2020; spending an estimated $144 million and contributing over $110 million to the NWT’s GDP. One in 14 NWT jobs is related to the tourism sector.
Overall, the NWT’s economy is forecast to contract 3.3 percent in 2020; significantly less than the national average of 8.2 percent (Conference Board of Canada).
Mining and government account for two thirds of the NWT’s GDP. Steps taken to keep diamond mines and the public sector active through the lockdown are the primary reason why the NWT’s GDP will not be as severely impacted. Small and medium-sized businesses depend heavily on these two sectors, for procurement opportunities and their workforces buy from local businesses.
With the easing of restrictions, there has been a significant rebound in consumer and business spending.
In fact, as the NWT economy begins to emerge from lockdown measures, the outlook for our economy is optimistic as nearly 90% of businesses have reported they feel they can survive the COVID-19 pandemic.
Not all sectors, however, will rebound at the same rate or to the same degree. While many residents rely on companies and businesses related to tourism (airlines, accommodations, indoor events, etc.) for employment, this sector may be the slowest to rebound.
The COVID-19 pandemic has required many businesses to innovate in order to reach their consumers. The most common adaption has been the incorporation of online deliveries and drop-off services.
Survey Findings – Tourism (March)
The first economic impacts of COVID-19 were felt from the cancellation of tour packages, by Chinese travellers early in the year. By March, a survey of tourism operators showed a bleak outlook for the summer tourism season:
- 94 percent of respondents had reported decreased bookings for 2020;
- Over 40 percent indicated bookings had decreased more than 80 percent over the previous year;
- 73 percent of respondents reported that their sales/revenues had decreased from the year before;
- 77 percent of operators had closed temporarily, 30 percent had reduced services and 3 percent closed permanently;
- 36 percent terminated or laid-off employees with a total of 325 employees experiencing some form of job loss.
Survey Findings – Business (April/May)
In April/May, an NWT-wide business survey captured the economic and financial impact of COVID-19 during the height of the pandemic and while strict economic lockdown measures were in place. Key findings included:
- 93 percent of businesses indicated they felt their business could survive the pandemic. However, 38 percent business respondents indicated that surviving the COVID-19 pandemic depends on how long it continues. Nearly half of the businesses indicated they felt their business could survive another 1-3 months with the lockdown and social distancing measures in place;
- The average length of time a business felt it could survive under the strict lockdown measures was reported at approximately 5 months, although 10 percent indicated less than one month;
- Businesses in the restaurant, food, and beverage industries were the least likely to indicate they could recover from the pandemic;
- 81 percent of businesses respondents reported a significant decrease in revenues, with an average decrease of 63% for all businesses. Tourism and transportation sectors experienced the largest decrease in revenues on average.
- Based on the Survey, we estimated on average all NWT businesses had to lay-off 2.5 full-time and 2.6 part-time jobs. With the following industries most impacted: restaurants, accommodations, arts, entertainment, and recreation industries; and
- A third of businesses reported an increase in their input costs (materials, labour and equipment) with an average increase of 22 percent.
- Businesses said they needed government support to pivot their business practices such as taking their business online.
- Some businesses wanted government support to cover costs and processes to meet health standards necessary to reopen.
Survey Findings – Consumer (June)
This survey of NWT residents provided insight into the demand-side of the economy, with respect to the goods and services demanded by NWT residents, their employment status and their ability to meet financial obligations.
(Note: data from this survey is still being compiled and is yet to be released publically.) Preliminary findings show:
- 27 percent of consumers have increased their use of online shopping for local goods, 51 percent have increased their consumption of take-out food, 28 percent have increased their use of online grocery shopping, and 20 percent have increased their use of delivery services;
- Respondents indicated they would like businesses to offer more online shopping, curbside picks or home deliveries, and drive-in meals;
- 71 percent indicated they are likely to travel within the NWT within the next 6 months;
- 21 percent of residents indicated they are now more likely than before COVID-19 pandemic to travel to communities nearby and 23 percent indicated they are more likely now than before COVID-19 pandemic to travel to other parts of the NWT;
- There is some reluctance to receive tourists from outside the NWT into communities, depending on the place of origin of the tourist:
- 74 percent of respondents would welcome tourists from other parts of the NWT;
- 36 percent of respondents would welcome tourists from other parts of the Canada;
- 17 percent of respondents would welcome tourists from other countries (not including United States); and
- 14 percent of respondents would welcome tourists from the United States.