Regions with large agricultural bases have surging regional economies while those which relied heavily on tourism were struggling.
The latest quarterly figures from Westpac McDermott Miller showed that Gisborne/Hawkes Bay have recorded a huge bounce in confidence, followed by Nelson-Marlborough-West Coast and Taranaki/Manawatū-Whanganui.
It showed the “optimists now outweighed the pessimists” in most regions, except in Northland, Otago and Southland – although the news was not entirely grim for the southern regions which had been hard-hit by the Covid-19 linked downturn.
Senior agri economist Nathan Penny said the bounce in confidence for most regions was a reflection of the general rebound in the economy, helped by news of positive vaccine developments overseas.
Leading the charge was Gisborne/Hawkes Bay, described as the country’s most bullish region, with confidence having jumped a “whopping 34 points over the quarter”.
Primary industries had underpinned the surge led by forestry, with horticulture a close second and the sheep and beef sector “ticking over”.
Penny said the region had the country’s hottest housing market with prices up more than 20 percent in a year.
He said it would not be a surprise if the trend continued through next year.
Economic confidence in Nelson-Marlborough-West Coast was the country’s second-highest, having jumped 12 points in the quarter.
Horticulture, agriculture, viticulture and forestry underpinned the surge, backed by strong house sale which Penny described as a “double-edged sword”.
“Those who own their own home, or have their own properties – they’re feeling a bit wealthier and perhaps can spend off the back of that.”
Auckland has also shown a positive lift in confidence, linked to a “red hot housing market” but its reliance on tourism and the absence of visitors explained why the region was “languishing near the bottom of the regional economic confidence pile”, Penny said.
He said the government’s confirmation of quarantine-free trans-Tasman travel from the first quarter of next year was boosting the region’s outlook.
The quarterly survey showed Northland was the only region to post a nationwide fall over the quarter, linked to the restructuring of the Marsden Point Refinery and resulting job losses.
Confidence dipped five points over the December quarter, and despite the knock caused by the refinery announcement, Northland’s agricultural industries were performing well.
Penny said the region’s housing market was rising and was expected to maintain that trend next year.
He said domestic tourism would have boosted hotspots like Queenstown and Wanaka, which was helping to ease what had been a gloomy outlook for Otago, where “optimists equalled pessimists” over the latest quarter.
Penny said the prospect of a return of international tourists and students next year was adding to a brighter outlook.
Economic confidence in Southland had crept back into positive territory, helped perhaps by news of a reprieve for the Tiwai Point Aluminium Smelter.