Regional economies on the mend

New Zealand’s regional economies are beginning to recover, with most areas improving from scores of 2 to 3 out of 10 in 2024, Kiwibank reported.

“2024 is shaping up to be a better year—just,” said Kiwibank’s Jarrod Kerr, Mary Jo Vergara, and Sabrina Delgado (pictured above, from left to right).

Despite the progress, Wellington remains stuck at an icy 2/10.

South Island leads the way in growth

The South Island is outperforming the North, with Southland topping the leaderboard with a score of 5, driven by robust building activity.

Otago follows with a score of 4, bolstered by the ongoing recovery in tourism.

“Queenstown just feels better,” the Kiwibank economists said, reflecting the region’s positive momentum.

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Wellington struggles amid public sector cuts

Wellington continues to lag behind other regions, with its economic score remaining at 2/10.

Reductions in government spending and public sector job cuts are expected to further challenge the region.

“Businesses are no doubt bracing themselves for tougher times over the coming year,” the Kiwibank economists said.

Retail sector faces tough conditions nationwide

Retail sales across most regions have been dire, with Wellington experiencing a significant 3.3% decline.

However, regions like Gisborne and Otago saw stronger-than-average growth, supported by post-cyclone rebuilding efforts and the return of international tourists.

“It’s truly been a shocker,” the economists said.

Rate cuts expected to boost regional recovery

Looking ahead, anticipated interest rate cuts in 2025 are expected to breathe new life into regional economies.

“Rate cuts will lower the cost of leverage and bolster investment intentions,” Kiwibank economists said, predicting that 2025 could bring significant improvements in business confidence, household stress, and regional economic scores across New Zealand.

Read the Kiwibank report in full here.

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