A narrowing of differences
|The nature of New Zealand's economic slowdown has started to change. Smaller, more export focussed regions of New Zealand are still outperforming big metropolitan regions, such as Auckland and Canterbury. However, the gap is narrowing, and this is likely to continue over the coming year.
New Zealand's economic slowdown, which began in 2016, is now firmly established. At first this was a consumer driven phenomenon, and mostly of a domestic nature, with slowing net migration and a cooling housing market helping to dampen household spending. Nowhere was this more evident than in the heavyweight Auckland and Canterbury regions, which together account for about half the country's economic output. Canterbury was also affected by the winding down of rebuilding activity, which effectively sent the region's construction sector into reverse.
At the same time as these big regions were feeling the heat, others in New Zealand were powering ahead. These tended to be smaller regions, usually with a large rural backbone, heavily focused on exports. Times were good and although weather events sometimes played havoc with production, elevated prices for dairy, logs, meat and horticulture products meant that the money kept rolling in.
Times were also good for those regions heavily dependent on tourism. New Zealand was clearly the flavour of the month for quite some time, attracting huge numbers of overseas travellers to these shores. Regions like Otago and Southland were bursting at the seams. Even some non-traditional tourist regions were enjoying bumper seasons, evidenced in part by the arrival of an increasing number of cruise ships and backpackers that filled up bed and breakfast establishments.
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