Economic activity in the regions remained “finely balanced” for the first three months of this year, Infometrics’ March 2023 quarterly economic monitor shows.
A strong labour market, rising interest rates and weather disruptions were all major influences, but it was still a robust start to 2023.
The quarterly monitor found a 2.7% per annum rise in provisional economic activity for the March quarter, but several indicators signalled a more challenging economic outlook.
Infometrics chief executive and principal economist Brad Olsen said based on their initial estimate, which showed a small increase in activity, New Zealand might have narrowly avoided a recession – “so far, at least”.
The rebound in international tourism continued to bolster economic growth in regional economies, such as Otago, Canterbury and Auckland.
As tourist arrivals have recovered to two-thirds of pre-pandemic levels, guest levels have risen by 52% per annum over the past 12 months.
However, Infometrics’ regional economic assessment also showed the hit to local economies from Cyclone Gabrielle and other weather events throughout the first few months of 2023.
Olsen said economic activity in Hawke’s Bay, Tairāwhiti, Gisborne, Northland and Coromandel fell as horticulture production was destroyed, meat and dairy processing disrupted, and transport infrastructure severely damaged.
“Despite solid nationwide economic activity growth of 2.7% per annum, Hawke’s Bay, Tairāwhiti and Northland all saw economic activity down by between 0.7% and 0.8% from a year ago,” he said.
However, various indicators across households and businesses showed activity had “swiftly regained momentum” after recent weather events, which is an “encouraging outcome”.
Across the wider economy, accelerating population growth has improved the labour supply, which has supported solid spending activity.
