Kiwibank’s latest Annual Regional Report suggests a tentatively optimistic outlook for the national economy. Each region in New Zealand has improved its economic scores, except for Wellington, which continues to experience economic decline.
The report identified Southland as the region with the highest economic score, achieving a 5 out of 10.
According to the report, “as building activity in the rest of the country has slowed down, Southland has ramped up. New dwelling consents are growing at pace, supporting construction and housing activity in the region.”
Otago is another top performer with a score of 4 out of 10, largely due to the ongoing recovery in the tourism sector. Canterbury’s score also improved to a 4.
Northland, Waikato, the Bay of Plenty, and Hawke’s Bay have also seen improvements in their scores, with 3 out of 10, which is an improvement from the average score of just 2.1 last year.
While most regions recorded improved economic scores, Wellington’s score remains unchanged at 2 out of 10. The region’s economy is expected to face significant challenges in the coming year due to reductions in government spending and headcount. Businesses in Wellington are likely preparing for the more difficult economic conditions ahead.
“2024 is shaping up to be a better year for most regions” Kiwibank chief economist Jarrod Kerr stated. “We’re still very much in a challenging economic environment. But the overall outlook continues to improve, particularly with the anticipated interest rate cuts expected to breathe new life into a rather deflated economy.”
Moreover, certain areas have experienced improvements in employment growth rates over the past year, with Taranaki leading at a rate of 6.2%. This increase in job opportunities is attributed to the diversification of the local economy. The Gisborne and Hawke’s Bay regions are also generating more jobs as they continue to undertake repairs and rebuilding efforts following Cyclone Gabrielle.
Unlike the rest of the country, Wellington has entered a period of decline (-2%). As of March 2024, Wellington’s unemployment rate stands at 4.6%, which is higher than the national average of 4.3% but lower than Auckland’s rate of 4.8%.
“What we’re really feeling is that things are slightly better than last year but still at recessionary levels. There are places where people are in pain; they’re hurting,” Kerr said.
“The message we’re saying is look to next year. Next year is going to be a better year than this.”