The past two years have been very challenging for everyone, particularly for businesses. But also for our customers, our suppliers, and our employees. And for their families, and our families. Some have lost people dear to them. Fortunately, in New Zealand, the illness and death caused by COVID have not been on the scale that has been suffered in many other parts of the world (for which we should be grateful).

Nevertheless, it has been a tough time. Many people have lost their businesses and many employees have lost their jobs. As always, the effects have not been evenly distributed – some businesses, some sectors, some occupations have suffered more than others.Be not troubled – for all these things must come to pass, but the end is not yet.

The perpetual optimists among us may have been hoping that 2022 would get off to a much better start, but the current outlook is for more stormy weather.

  • Stats NZ has released the inflation indices for the December quarter. Although the quarterly CPI increase is down slightly from the September quarter, the annual increase for the year to 31 December 2021 is 5.9%, which is the highest annual increase for 31 years.

  • Rising inflation is not unique to New Zealand – many other countries are also experiencing higher inflation due to many factors including supply chain disruptions, increasing oil prices (the price of crude oil is now more than US$85 a barrel or 60% higher than the price at the start of 2021 while petrol prices in New Zealand are up 30% year-on-year), labour shortages, soaring transport costs, and steep increases in the cost of many commodities and materials used in the construction industry.
  • The cost of construction of new dwellings in New Zealand has risen 16% since December 2021.
  • The Omicron variant of COVID is now in the New Zealand community, the whole country has been put on the “Red” traffic light, and “locations of interest” (and “super-spreader events”) are popping up everywhere. The government modelling has extended up to a possibility of 50,000 cases per day, although they have also modelled significantly lower case numbers. Nobody knows for sure how quickly it will spread but internationally it has quickly raced through populations.
  • The good news is that, for most people, the Omicron variant causes much milder illness than the earlier variants. Nevertheless, if case numbers run as high as anticipated then there will still be a lot of deaths.
  • If the Omicron variant really takes off and the people diagnosed with COVID (and all their contacts) have to isolate for 14 days (or even for 10 days), that will be a lot of people not turning up to work. This will quite likely exacerbate the existing labour shortage and create even more supply-chain issues.
  • On top of all that, the geopolitical situation in the Black Sea area seems to be deteriorating. Hopefully, the issues can be resolved diplomatically because a shooting war would probably put additional pressure on both inflation and world supply chains.

Despite a rough start to 2022, these things will pass. In the meantime, we need to focus on developing plans to survive whatever circumstances the year may throw at us and be prepared to react very swiftly. Shared wisdom will help.

After the rain comes the fine weather

Have you considered how each of the clouds on the horizon may affect your particular business? Have you planned how you will deal with the most critical risks?

At The Alternative Board we believe in the value of shared wisdom, and we’re starting to see the positive actions our members are taking to combat the storms ahead. If you’re interested in finding out how being on an advisory board can help you walk through the storm, get in touch. It’d be great to have a chat.

The Alternative Board - OwnersAuckland NorthWorried how you’ll weather the storm?
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