South Island pulls ahead as regional divide widens — economist
The Annual Regional Note, released on Saturday, showed that the South Island was continuing to outperform the North and that while most regions recorded gains, progress remained uneven.
The national average score has lifted from 3 to 4 out of 10.
Kiwibank chief economist Jarrod Kerr said the economic tide was turning.
"Most regions have seen at least some improvements, but the recovery is far from even."
ADVERTISEMENT
Southland and Otago lead with scores of 5, driven by a building boom and tourism rebound respectively.
Northland, Taranaki, and Gisborne scores declined. Wellington and Auckland lifted slightly, with New Zealand's biggest city supported by population growth.
"The further south you go, the more optimistic people are," Kerr said.
"So you think about Northland and Taranaki and Gisborne, they've gone backwards over the last year. And you think further south, you know, going to Otago and Canterbury, they're actually doing a lot better."
He said the divide could become a "self-fulfilling prophecy" with people leaving places such as Auckland and moving to Christchurch.
"It is more affordable and, these days, you don't necessarily have to be in the largest cities — a lot of people are working from home."
Kiwibank chief economist Jarrod Kerr. (Source: 1News)
ADVERTISEMENT
Kerr said the housing market had remained largely "locked in lateral moves".
"Since stabilising in early 2023, national house prices are up just 1.8%. Since the Reserve Bank began cutting rates in August, house prices have only lifted by half a percent — and, in many regions, they're still flat or falling."
Labour market conditions were also mixed. Otago had the strongest employment growth in the country, up 8%, while Taranaki recorded the steepest employment drop at -8%.
Retail sales remained subdued and below their average levels in most regions, with Wellington recording the steepest at -3.3%, while regions such as Waikato, Northland and the Bay of Plenty improved slightly on last year.
Consumers were still being cautious, Kerr said,
"They're rebuilding balance sheets, not rushing to the shops just yet."
'Time for the Reserve Bank to step on it'
ADVERTISEMENT
Kerr told 1News he would like to see the Reserve Bank "go from having their foot firmly on the brake, to putting it in neutral, to actually putting their foot on the accelerator".
He believed the Official Cash Rate should fall from its current position at 3.25% to 2.5% to provide meaningful stimulus to the economy.
"We think the risk, if anything, is that inflation falls too far and falls below 2% because the economy is so weak. So, job done on the inflation front, it's time to stimulate growth."
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Otago Daily Times
3 hours ago
- Otago Daily Times
‘Success' stories behind growth
While Otago may have topped a national economic scoreboard, more needs to be done to spread the word about the South's success, a business leader says. Kiwibank's latest Annual Regional Note, released last week, placed Otago and Southland as the two top performing regions in the country as the South continued to outperform the North. "The further south you go the better the business climate seems," general manager Troy Sutherland said. Ranking a total of 13 regions on a score from 1 to 10, the report summarises seven economic indicators including population growth, retail sales, employment, house price index, house sales, building consents and international tourism electronic card transactions. Otago and Southland both ranked 5, compared with the national average of 4, activity boosted by a bounce back in tourism, the report said. Business South chief executive Mike Collins said the results showed that optimism had returned to the region. "We've been always saying the further south, the more optimistic we are about the future. "I think what we're seeing there is that optimism is turning into action in terms of people spending and people having confidence in making decisions." The region had been "sitting on the cusp" of growth in housing and commercial developments, and decreasing interest rates coupled with more optimism had translated into more transactions around building consents, Mr Collins said. However, there was still a lot of work to do around sharing the region's stories of success with the rest of the country. "Off the back of these kind of announcements, we really need to be coming together across the region and talking about those stories of success and building on those. "I think the rest of the country don't really understand how much opportunity there is down here yet. "There's so much more to show and tell." As a key tourist destination, Otago benefited both in terms of employment and consumer spending, the report said. "As employment growth across most of the country has gone backwards, Otago recorded a massive 8% increase." The region topped the list when it came to retail sales growth, rising about 6.5% in the 12 months to March this year. Otago also recorded the highest year-on-year growth in residential building consents, a rise of nearly 35% in the three months to May this year. Southland, Otago and Canterbury — which recorded "materially shallower declines" in house prices than other areas around the country — were either above or close to their post-Covid highs. House prices in Otago had hovered around their peak levels over the past couple of years, while prices in Southland were 1% higher than their post-Covid surge. International card spending in Otago and Southland rose 1.4% and 5.2% respectively. Dunedin Mayor Jules Radich said the results were encouraging for Otago and Southland. "I think there's possibly a little bit more optimism in the region since we've got the go-ahead and resumption of work on the new hospital, which services the whole region. "Also, the upturn in farming, the increase in farming returns both in red meat and dairy products is very helpful to the Otago-Southland economy." Retail development in Dunedin was also growing, and it was easy to see new buildings taking shape around the city. While the "lion's share" of the region's growth was happening in the Queenstown Lakes District, Mr Radich said he was assured about Dunedin's contribution.
1News
a day ago
- 1News
'Call me Mr Cash Man': MP seeks protection for hard currency
Self-proclaimed cash advocate and MP Jamie Arbuckle believes his proposed law protecting hard currency transactions is about more than accessibility — it's also about privacy and preventing "Big Brother" surveillance. The New Zealand First MP's members' legislation, the Cash Transactions Protection Bill, would require vendors to accept cash up to the value of $500, with no limits on the amount of cash that must be accepted for essential items like fuel and food. 'There's a real concern across New Zealand that we're becoming a cashless society, and we've got a lot of people who depend on cash,' the MP told Q+A. He said that particularly applied to people living in rural areas, the elderly who are more comfortable using cash than digital systems, and those on low incomes. A self-professed fan of using cash, Arbuckle said, 'cash is king, and you can call me Mr Cash Man if you like.' ADVERTISEMENT 'I've got to tell you right now, I don't like walking into a shop and not being able to pay cash for a coffee.' Composite image by Vania Chandrawidjaja (Source: iStock/1News) But he said in an increasingly digital world, there was a more serious point to be made about the ability to make anonymous payments. 'People are telling me they want to have the ability to use cash, it's a freedom of choice issue.' 'It's really the only true way of having privacy in a transaction. You don't get that with electronic payments. There's always the concern that Big Brother or someone is able to look at where you've been, what you've purchased, so the majority of people have been very positive about protecting cash use.' A Reserve Bank survey released in June 2025 found that — while electronic and debit card use was by far the most common method of making payments — a significant minority of the country continued to use cash regularly. Around 46% of respondents said they used cash 'to pay for everyday things', down slightly from 48% which an equivalent survey found in June 2023. ADVERTISEMENT The survey also found a majority had used cash at least once in the seven days preceding the survey being taken, with approximately 33% of respondents saying they hadn't used cash in the last week, and a further 3.6% saying they would never use cash. Further research undertaken last year by the Reserve Bank found Kiwis value being able to use physical cash. Director of money and cash Ian Woolford said, '84% of respondents were worried about losing access to banknotes and coins, and want assurance that cash will still be issued by the Reserve Bank and not reduced or replaced by digital cash.' 'We'll keep issuing cash for as long as New Zealanders want to use it," he said in December. "We're doing a lot of work to redesign the cash system, including helping retailers through community cash services trials next year in several rural communities lacking over-the-counter bank or ATM services.' Some businesses have moved to being cash-free, but Arbuckle said in his view, it couldn't be an opt-in and opt-out system. 'The majority of businesses hold cash, so we're only talking about a small amount of businesses that would have to change. ADVERTISEMENT "Cash is legal tender, and you should be able to purchase with cash.' He said if the bill is pulled out of the member's bill biscuit tin, he'd welcome feedback from businesses that might be affected during the select committee process. Q+A with Jack Tame is made with the support of New Zealand On Air
1News
2 days ago
- 1News
Why NZ can't shake the recession: 'Brought to its knees'
New Zealanders were told to "survive till '25" for the economy to pick up - but now one major bank economist says it's probably going to be 2026 before any real improvement happens. Kiwibank's latest Annual Regional Note shows small improvements across the country, but weak scores overall. The national average score has lifted from three out of 10 to four. Southland and Otago top the table at five. Otago was boosted by a recovery in international tourism and improvement in employment. Northland, Taranaki and Gisborne went backwards. Taranaki had the biggest fall in employment of anywhere in the country, at 8%. Northland reported a double-digit drop in building consents. ADVERTISEMENT Retail sales remain below their average levels over the past decade in most regions, as weak household confidence weighs on consumption. Kiwibank said Wellington recorded the steepest annual decline at -3.3%, while regions like Waikato, Northland and the Bay of Plenty experienced a slight improvement on last year. 'Wellington is just more pessimistic' Wellington's score improved from a two out of 10 to a three out of 10 while Auckland lifted from a three to four. "Wellington is just more pessimistic," Kiwibank chief economist Jarrod Kerr said. "It's gone through a lot in recent years. You can see it in their activity, you can see it in the housing market. You can see it in the economy, the city has been brought to its knees and it's been struggling to shake the pessimistic vibe." He said both Auckland and Wellington were well below average. "If you look across the regions, some of them have gone backwards and others are improving but it's not good. "When you look at the South Island things are better, people are definitely more optimistic in the South Island but even then the top-scoring regions get a five out of 10." ADVERTISEMENT He said the report helped solidify the view that rate cuts to date had not been enough to turn around the economy. "We're really crawling out of this recession rather than regaining our footing and looking to grow from here. We're still struggling across the entire country." He said Kiwibank customers last year had talked about needing to hold on until this year. "We are halfway through the year and, yes, things are better but only by a little bit." Worse off than Australia New Zealand was worse off than Australia, he said. "Their economy is much stronger than ours but in their terms it's soft… where everything washes out is the labour market and, you know, the unemployment rate tells you a lot. Our unemployment rate is over 5% and theirs is pretty close to 4%." ADVERTISEMENT Part of the reason was the more aggressive interest rate hikes from the Reserve Bank, he said. "We were much more aggressive in our rate hikes than in Australia. We were much more aggressive on inflation than across the Tasman. "I think both the RBA and RBNZ made mistakes as I think every central bank did through the Covid period, we overstimulated in hindsight but at the time it was the right thing to do. And then we had to deal with the inflation problem." He said the Reserve Bank had kept the official cash rate at 5.5% for too long as it worked to tackle inflation. "We had a really bad recession last year, which the Reserve Bank openly orchestrated, they said 'look, we need a recession to get inflation back down'. The Australians didn't orchestrate a recession, they didn't slam the economy into the floor." Kerr said recovery was still coming but he had hoped it would have started more obviously by now. "We're hoping it takes off in the second half of this year as more and more people refix on to lower rates. Then it's more of a 2026 story now."
