COVID-19 Economic Recovery Roadmap (ERR)

 Cook Islands economy in the wake of COVID-19

The Economic Recovery Roadmap (ERR) is the government's next step in paving the way for our economy to recover and get closer to where we were pre-COVID.

The economic contraction experienced by the Cook Islands as a result of COVID-19 pandemic and necessary travel restrictions has been one of the largest in the world, with a fall in Gross Domestic Product (GDP) estimated by the Asian Development Bank (ADB) to be close to 32 per cent over the last 15 months.

This fall has hit the trade balance of the Cook Islands hard, with revenues raised from tourism activities drying up overnight, in what is the largest component of GDP (worth approximately $1 million per day, or $368 million per year, pre-COVID). As well as this direct impact, the falling of incomes has seen reductions in spending on goods and services produced domestically and overseas, and these impacts together have reduced business incomes. With lower incomes and the very high degree of uncertainty around the economy until borders remain open for some time, private investment is not expected to recover quickly. The government support under the ERP from April 2020 through to June 2021 has kept the economy from contracting further, and helped to minimize the pain felt by people and businesses of the Cook Islands, but cannot continue indefinitely.

As visitors return, causing tourism receipts to grow from zero, and the ERP winds down, new areas of focus to grow GDP towards pre-COVID levels are needed, and will include a mix of policy and expenditure from both public and private sectors.

The recovery from this severe recession will not occur overnight, but we have identified the following 8 areas of focus will be key to driving and facilitating the recovery over the next 12-18 months. These areas are:

•            Reducing the cost of borrowing

•            Managing the burden of public debt (in particular reducing the interest rates charged CIG)

•            Infrastructure investment

•            Reducing barriers to competition and business

•            Productivity growth

•            Improved public sector efficiency

•            Growing the labour force and preventing depopulation

•            Attracting foreign investment that will benefit the Cook Islands.

Each of these key areas work alongside the Economic Development Strategy 2030 released in January 2021 and include actions outlined in the strategy.

 

 

Cook Islands Economic Bulletin

The Ministry of Finance and Economic Management (MFEM) has released its latest Economic Bulletin with an updated economic outlook now that we know that our border with NZ will reopen on January 13, 2022.

The full Economic Bulletin can be found below:

pdfCook Islands Economic Bulletin - November 2021

 

BUSINESS SUPPORT MEASURES

In light of the border closure on Monday 16 August, the Cook Islands Government will be reinstating the Wage Subsidy and Sole Trader Grants to the end of September 2021, with the option of extending this should the situation continue. This process has been streamlined to provide the support to businesses as quickly as possible, which ensures employers keep their staff on payroll and businesses and sole traders are able to keep functioning as best as possible under the current circumstances.

Factsheets with further information on each of the funding initiatives are below:

 

Extension of Business Support Measures – November 2021

pdfWage Subsidy Reinstatement Fact Sheet 

pdfSole Trader Cash Grant 

 

Extension of Business Support Measures – December 2021 & January 2022

pdfBusiness Grant Reinstatement Fact sheet - December

pdfSole Trader Cash Grants December & January Fact Sheet

 pdfWage Subsidy Reinstatement December & January Extension Fact Sheet

 

For any queries regarding Wage Subsidy or Sole Trader Applications, please contact the Revenue Management Division on 29365 (Mon - Fri from 1pm - 4pm) or email tax.info@cookislands.gov.ck.

Or for more information on the reinstated support measures, contact the MFEM Economic Planning Division on 29511 or email mfem.economics@cookislands.gov.ck