The Caledonian economy experienced "a slight improvement" before the health crisis
The 2019 annual report of the Overseas Emissions Institute (IEOM) on New Caledonia has been published. Over 200 pages provide an analysis of the territory's economic performance and outlook. While the overall assessment remains slightly positive, it also highlights a certain fragility of the Caledonian economy, due to the health crisis and the referendum on independence.
The first sector affected is nickel. The mining sector experienced a record of nickel exports in 2019, however it did not compensate for the drop in metal exports. Additionally, nickel production recorded a decline of 20.000 tonnes compared to 2018.
Regarding employment, there is a slight improvement for the private sector, which rose by 0,3% last year, a first increase in four years. However, the situation varies by sector.
Some sectors fared better in 2019, particularly in services. “We have had good figures on tourism, (with a record of 126.600 visitors), which will not be the case for 2020 due to the health crisis. Other sectors which have created jobs are: personal services, business services such as digital and banking-insurance, among others”, explains Magali Ardoini, head of the studies department at IEOM. On the contrary, the construction industry has experienced a decline with a loss of 1.000 jobs since 2015.
“The business climate indicator, appreciated by business leaders, recovered significantly in 2019. Except that if we observe it over a long period, entrepreneurs remain less positive than in previous years because of a weaker overall economic growth”, says Yann Caron, director of IEOM.
The monetary environment turns out favorable to Caledonians, due to historically low inflation and particularly low lending rates. Household consumption remained stable.
Other economic references, such as the real estate market and the automotive sector declined in 2019. There have been lower investments in the public sector due to a lesser budget.
“In conclusion 2019 has seen a slight improvement compared to 2018, the year of the first referendum, even though the context remains of uncertainty and also of fragility”, explains Yann Caron. “Above all, this reflects maturity in the economy as the large mining investments have been made and smaller scale public investments compared to previous years.” With regards to 2020, “we are lucky in New Caledonia to have a fairly diversified economy, which is based on several pillars and is therefore less affected than other countries of the Pacific."
In August 2020 a quarterly business climate indicator report will be published by IEOM to assess the consequences of the pandemic in New Caledonia.