In the last three months of 2023, the Tairāwhiti economy saw little change from the previous two quarters. The subdued economy reflects the lingering impacts of Cyclone Gabrielle, household spending pressures and challenges in the primary sector.
“The Infometrics Quarterly Economic Monitor gives us a clear view of the local economy’s performance over the quarter, and the whole of 2023, benchmarked against national figures,” said Trust Tairāwhiti General Manager Economic Development, Richard Searle.
“Overall, the results are largely to be expected, given what a tough year 2023 was for our region, coupled with external inflationary pressures.”
Provisional data in the Infometrics Quarterly Economic Monitor shows a 1.8% drop in gross domestic product for the year to December, compared with a national average of 0.7% growth.
“The primary sector continues to face challenges, with a decline in meat prices. Forestry prices appear to have stabilised at lower levels but ongoing volatility is expected.
“After the severe weather events during the year, future land use is front of mind. Encouragingly, there’s a strong common desire to see our region’s land returning greater value for our economy and our communities, and being sustainably managed for future generations but the uncertainty around regulatory change is reducing appetite for investment.”
Construction remained a strong performer for Tairāwhiti, as a result of continuing residential development and post cyclone construction activity, which is supporting job growth however we are seeing the early signs of construction demand reducing
“As Transport Rebuild East Coast (TREC) gears up to deliver multiple roading and infrastructure projects, we should expect an uplift in employment and local economic activity. Local contractors are challenging TREC to deliver on their promises to procure locally wherever possible in order to maximise the benefits to the local economy With changes from the new government starting to roll out, it will be interesting to see what impact this has, particularly with government housing programmes.”
In the tourism sector, which relies primarily on domestic visitors, expenditure was down by 1.9% and guest nights down by 9.7% in the year to December. This contrasts with a national increase of 9.2% and 26.6%.
“However, it’s been a classic Tairāwhiti summer weather-wise, and the cruise season has performed strongly, with opportunities to leverage its success for the benefit of the wider tourism industry as we start planning for an even bigger 2024/25 cruise season.”
Employment was up 0.7% compared with a year earlier, driven largely by the construction and health sectors. New Zealand-wide, employment growth was 3.1%. The region’s average unemployment rate remained unchanged at 4.5%.
A 1.5% year-on-year increase in business count is reflected in the volume of start-ups and initiatives that the Trust’s Regional Business Partners team are seeing. The current economic environment means testing times ahead for businesses, who are proactively focusing on reducing costs and improving operating efficiency.
A noteworthy statistic is the 318% increase in electric vehicle registrations in Tairāwhiti for the year (92, up from 14 the year before). The established EV charging network and average travel distances within Tairāwhiti make this region well suited to EVs, and the climate and cost benefits seem to be resonating with consumers.
Throughout Tairāwhiti, households remain under significant financial pressure due to mortgage rates and the continued high cost of living. Consumer spending is in line with the New Zealand average – both up 4.3% year on year – but with inflation still high, people are getting less for the money they spend. This pressure is only expected to increase further during the winter months although interest rate relief is now looking more likely later this year.
House prices, sales and new listings are all lower than a year ago, while the housing affordability ratio has improved. The average house value in Tairāwhiti is $610,183, a third lower than the New Zealand average.
Infometrics Quarterly Economic Monitor Tairāwhiti December 2023