A net 14 percent of Otago households expect their region’s economy to improve over the coming year, according to the Westpac-McDermott Miller Regional Economic Confidence survey for the December 2019 quarter.
This is slightly up on the 10 percent recorded for the September 2019 quarter.
“This slight pickup in confidence comes after a big drop in the previous quarter,” said Westpac chief economist Dominick Stephens.
“The improvement seen is likely to be because of rising house price inflation, particularly in Dunedin and Queenstown, low unemployment and an increase in overall spending in the region,” said Mr Stephens.
“Farmers and growers will also have been buoyed by elevated prices for dairy, meat and stone fruit, although weakening growth in tourism spending is likely to be a source of concern.”
Whilst farmers and growers in the broader district may be feeling more optimistic, it is unclear whether that optimism applies to Wānaka town where slowing tourism growth hits hard.
“It is true that growth in international guest nights to the region has been slowing for some time and this is being reflected in weaker growth in tourism spending,” said Paul Clark
industry economist for Westpac. “This is evident in most regions within New Zealand, but clearly has a bigger impact on key tourism hotspots such as Wānaka, Queenstown, and even Auckland.”
“The reasons for this are varied and complicated, but if I was to boil it down to a single factor I would pick weaker economic growth in key source markets, notably China, and rising globally uncertainties at the back end of 2019. International tourists tend not to travel far during times of economic strife,” he continued.
“Given that we are forecasting an economic slowdown in most source markets for tourists in 2020, it seems reasonable to suggest that tourism growth will remain sluggish over the coming year. This will affect tourism spending, which is not particularly good news for Wānaka.”