Infometrics head Brad Olsen says metro areas had the biggest economic contraction last year, at twice the rate of provincial areas Photo: RNZ / Samuel Rillstone
- Economic consultancy Infometrics says gradual recovery this year
- Regions faring better than cities
- Prospect of record dairy payout offers $19bn economic boost
- Employment will recover slowly and unevenly around country
The agricultural sector will likely carry the economy for a good part of this year, until lower interest rates filter through to boost spending and activity, according to the latest data.
Economics consultancy Infometrics' latest look at regional economies detects tentative signs of recovery in rural areas lifted by strong commodity prices, such as dairy and meat.
"Economic activity remains lower than a year ago in many industries and across different regions, although there are signs of improvement showing through," Infometrics chief executive and principal economist Brad Olsen said.
He said metro areas had the biggest economic contraction last year at twice the rate of provincial areas, while rural areas managed slight growth.
"Stronger export returns across the primary sector are starting to support activity across provincial and rural New Zealand, with strong returns for dairy, beef, and horticulture, and improving returns for lamb - although forestry returns remain poor," Olsen said.
A $19 billion payday
He said Fonterra's forecast of $10 a kilo of milksolids milk payout would put $19.2b in farmers' pockets, a 30 percent lift on the previous season, and that was being followed by strong prices for meat and horticulture.
"All in all, the primary sector is helping drive the start of the economic recovery."
Olsen said tourism was also showing signs of recovery, but sectors such as construction and manufacturing would be lagging.
Similarly jobs would remain soft, and be one of the last parts of the economy to show growth with some regions starting from a low point, such as Nelson and Gisborne, while Otago was the only part of the country to have job growth.
But improved spending, signs of life in the manufacturing and service sectors, and a levelling out in job adverts were positive.
"These slight improvements reinforce expectations of shifting economic gears in 2025, as household spending is freed up and economic momentum is regained,' Olsen said.
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