Rural Resurgence Powers South Island Into Lead In ASB's Latest Regional Economic Scoreboard
South Island still proving more robust than the North
Trouble in the Capital: Wellington remains in 15th place
Strong commodity prices and soaring food and fibre exports have helped power the South Island to a strong start to 2025, with Canterbury, West Coast, Otago and Marlborough in the top four spots of ASB's Regional Economic Scoreboard for Q1. Canterbury has kicked off 2025 on a high, securing first place off the back of a broad-based recovery across retail, housing and consumer confidence.
'The scoreboard is reflecting what many in the regions already know - rural New Zealand is doing the heavy lifting right now,' says Chief Economist Nick Tuffley. 'South Island regions are benefiting from strong commodity tailwinds and resilient export demand, especially across dairy, meat, forestry and horticulture.'
The rural-led momentum comes as the Government forecasts record-breaking export earnings for New Zealand's food and fibre sector, which are expected to rise 12% to $54.6 billion in the year ahead. Fieldays 2025 has put a national spotlight on the sector's strength, with farmers, growers, fishers and foresters driving a powerful export rebound.
According to Tuffley, 'We're seeing the impact of that performance filter through to local economies, particularly in regions like the West Coast, which has posted its best result in four years, and Canterbury, where rural strength is boosting confidence across the board.'
The West Coast made a remarkable leap into second place, thanks to robust construction activity and a rebound in retail sales. Meanwhile, Otago slipped to third, ending its long streak of scoreboard wins, despite Queenstown's ongoing tourism strength.
In contrast, Wellington ranked 15th for the third consecutive quarter, with Auckland in 10th place. While inflation is easing and interest rates have been cut, households are still feeling the squeeze.
'It's clear that the rural and urban economies seem to be moving at different speeds across the country,' says Tuffley. 'It's regional New Zealand, particularly the food and fibre sector, that's doing the hard work of pulling the national economy forward. Meanwhile, places like Wellington continue to face a range of challenges including employment, construction and consumer confidence.'
Looking ahead, ASB sees early signs of recovery emerging across the country, aided by the Reserve Bank's 225 basis points of OCR cuts to date. However, global uncertainty continues to cast a shadow over the pace and strength of that recovery.
The full ASB Regional Economic Scoreboard, along with other recent ASB reports covering a range of commentary, can be accessed at our ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html
@ASBBank @ASBMarkets www.asb.co.nz
About the ASB Regional Economic Scoreboard
The NZ Regional Economic Scoreboard takes the latest quarterly regional statistics and ranks the economic performance of New Zealand's 16 Regional Council areas. The fastest growing regions gain the highest ratings, and a good performance by the national economy raises the ratings of all regions. Ratings are updated every three months, and are based on 8 measures, including population, employment, retail trade, house prices, house sales, construction, consumer confidence, and new car registration.
ASB Bank
Helping you get one step ahead.
In 1847, ASB opened as the Auckland Savings Bank with the pledge: 'to serve the community; to grow and to help Kiwis grow'. And that is very much what ASB is about today.
ASB is a leading provider of integrated financial services in New Zealand including retail, business and rural banking, funds management and insurance.
ASB strives to consistently provide its customers with outstanding service and innovative financial solutions. They're dedicated to providing simple financial products that allow their customers to bank with them how and when they want.
We all have our own ways to measure progress, and our own stories about the things that matter to us. Whatever way you choose to measure progress, and whatever your goals, ASB is there to help you get one step ahead.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NZ Herald
15 minutes ago
- NZ Herald
KiwiSaver hardship reveals hidden cost of this economic downturn
We had news last week that KiwiSaver members withdrew more than $470 million for hardship reasons in the past 12 months amid continuing economic stress. Inland Revenue figures showed $470.7m was taken out of KiwiSaver in the June financial year, up 56.6% from $300.5m over the prior period. Looking back through the figures, there has certainly been a big spike in withdrawals in the past two years, but they have been on the rise for several years. Since Covid, both the number of people withdrawing funds and the amount withdrawn have risen steadily. As a barometer of the general economic situation, that isn't great. But the bigger problem with these hardship withdrawals is that the ultimate cost is (quite literally) compounded through the years. More than $1.3 billion of KiwiSaver funds has been withdrawn for hardship reasons in the past five years. If we do some back-of-the-envelope calculations and assume this money could have earned around 7% returns for the next 20 years, then we get a figure of more than $5b that will be missing from the nation's pool of retirement funds by 2045. Given the current trend of withdrawals, I suspect this is a conservative estimate. I understand why we allow withdrawals for hardship. It doesn't make sense for people to lose their homes or to go hungry when they have thousands of dollars sitting in a KiwiSaver account, so I'm not advocating that we stop allowing the withdrawals. However, there is a hidden cost and the situation highlights just how crucial it is for the Government to put more focus on retirement savings. There is a lot more money coming out of the KiwiSaver scheme to fund people into their first homes. Since Covid hit, an average of about $1.2b a year has been withdrawn from KiwiSaver for first home purchases. A home is an asset at least, and home ownership is an important step on the path to financial independence. I suspect we just have to accept the first home buyer withdrawals as a feature of the KiwiSaver scheme. If young people are in the scheme from the start of their working life and have $10,000 or $20,000 to put towards a house deposit, they are probably ahead of where many in my generation were at the same age. But the reality is that as a nation, we're well behind on where we need to be with our retirement savings. According to Stats NZ projections, the percentage of the population aged 65+ will increase from roughly 16-17% in the early 2020s to about 19-20% by 2030. By 2050, around 24-26% of New Zealanders are expected to be 65+. The old-age dependency ratio (ratio of elderly to working-age population) is expected to nearly double between 2020 and 2050. Our annual superannuation bill already comes in at more than $20b, and Treasury has projected that to rise to about $45b by 2037. According to Budget 2025 data, New Zealand Superannuation costs $4352 per person per year, making it the third-largest area of government spending after welfare ($6181 per person) and health ($5804 per person). From the Treasury's long-term fiscal projections, spending on NZ Super is projected to grow from 4.3% of GDP in 2010 to 7.9% in 2060, an increase of 3.6 percentage points. It is also rising as a percentage of the Government's total tax revenue – from about 17% now, it is projected to rise above 21% by 2037. So we know we have a problem. It seems almost certain that the age of superannuation will have to be raised to 67 in the coming years – despite the current opposition of NZ First and Labour. Future governments will almost certainly come under more pressure to means-test. KiwiSaver, which currently has total funds of $122b, is one of our great hopes. But the total figure is flattering. There are more than three million KiwiSaver members so the average fund size is just $37,000. Hopefully, that will be skewed by a lot of young people who will see their savings grow dramatically in the next decades. That brings us back to the downside of withdrawing funds early for hardship, though. We need to be saving more, not less. Moves by the Government to lift the default contribution rate for both employees and employers to 4% from April 2028 were a step in the right direction. However, they pale in comparison to Australia's compulsory scheme, which requires 12% employer contributions. The scheme has the equivalent of $4.5 trillion invested, making Australia the fifth-largest holder of pension fund assets in the world, not per capita but in nominal terms. Australia, for the record, also allows people to withdraw funds for hardship, but one suspects fewer people there need to. If we want to make the most of the KiwiSaver scheme we have, we need to look more closely at who is withdrawing their money and why. Meanwhile, young Kiwis are voting with their feet and joining the Australian Superannuation scheme ... by virtue of moving to work there. Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
NZ Herald
15 minutes ago
- NZ Herald
Heather du Plessis-Allan: We are being irrational about the price of butter
Unless you're into commercial scale baking, butter is not the thing putting the most pressure on household budgets. Try power. This winter power is costing the average household almost a block of butter every day. Or rates. That's costing the average Wellingtonian more than a block of butter every day. Those expenses have no alternatives. You have to pay them. With butter we at least have alternatives. If we don't like the price we can do a swap. I don't want to be Marie Antoinette but at least we have the option to switch to margarine. Not only have we abandoned logic, but also facts. Even the Finance Minister briefly took to complaining that butter is cheaper in Australia than in the very country that produces it. Except that's not true. At the time of writing, if you take Woolworths' salted butter, which is available both sides of the Tasman, adjust for currency and the fact the Australian Government does not charge their equivalent of GST on butter, we actually pay 30c less. Discounting butter domestically is impractical, as it would require subsidies, impacting farmers and shareholders. Actually, the price of butter is a good news story for New Zealand. Because if we're paying our farmers more, the world is paying our farmers more. And they're buying a lot more blocks of butter than we are. So that means they're paying a good chunk towards our tax take, our health, our roads, our schools. It's become slightly fashionable to suggest the solution is to discount butter domestically. That's a nutty idea. A discount is a subsidy. A subsidy has to be paid by someone. Who? Fonterra? The shareholders will probably object to that. Maybe, if this drama runs on long enough and there is enough reputational damage to Fonterra, it might be in the business' interest to cut the price to make the pain stop. That would not be a good day for farmers and shareholders. Miles Hurrell attributes the 46.5% rise in butter prices to global demand and supply issues. Photo / Alyse Wright The Government? Again, bonkers. If New Zealand is too broke to afford the full Dunedin hospital build, we're too broke to help commercial bakers afford their butter. The truth is there is no fix to the price of butter that isn't stupid or temporary. We simply have to pay the price that we pay. And the Finance Minister knows this. She knows this because she is a very clever woman. And because she worked for Fonterra for six years. Finance Minister Nicola Willis has turned butter into the cost-of-living symbol. Photo / Mark Mitchell So, she should never have turned butter into the cost-of-living symbol she has. This really started with her in April when she visited Costco and was taken by the fact it could sell butter for about half the price mainstream supermarkets were selling it for. It became her evidence that supermarkets were ripping us off. But then somehow, Fonterra got dragged into it and one of their regular ministerial briefings became a please-explain. And then the TV news was chasing the CEO Miles Hurrell around the forecourt of Parliament and going live to air while the meeting was under way. And there were expectations. And then nothing happened. And it has become yet another example of the Finance Minister, disappointingly, talking big but doing nothing. Just like with the retail banks. And just like with the supermarkets, so far. Spare a thought for Hurrell. The man is one of the most impressive Kiwi CEOs of his generation but had to spend his week cast as the villain of the butter story. There is no story. It's not even the biggest pressure on our weekly bills.
1News
16 hours ago
- 1News
South Island pulls ahead as regional divide widens — economist
New Zealand's regions are showing signs of recovery, but there is a growing economic performance divide between the North and South Islands, a new report from Kiwibank says. The Annual Regional Note, released on Saturday, showed that the South Island was continuing to outperform the North and that while most regions recorded gains, progress remained uneven. The national average score has lifted from 3 to 4 out of 10. Kiwibank chief economist Jarrod Kerr said the economic tide was turning. "Most regions have seen at least some improvements, but the recovery is far from even." ADVERTISEMENT Southland and Otago lead with scores of 5, driven by a building boom and tourism rebound respectively. Northland, Taranaki, and Gisborne scores declined. Wellington and Auckland lifted slightly, with New Zealand's biggest city supported by population growth. "The further south you go, the more optimistic people are," Kerr said. "So you think about Northland and Taranaki and Gisborne, they've gone backwards over the last year. And you think further south, you know, going to Otago and Canterbury, they're actually doing a lot better." He said the divide could become a "self-fulfilling prophecy" with people leaving places such as Auckland and moving to Christchurch. "It is more affordable and, these days, you don't necessarily have to be in the largest cities — a lot of people are working from home." Kiwibank chief economist Jarrod Kerr. (Source: 1News) ADVERTISEMENT Kerr said the housing market had remained largely "locked in lateral moves". "Since stabilising in early 2023, national house prices are up just 1.8%. Since the Reserve Bank began cutting rates in August, house prices have only lifted by half a percent — and, in many regions, they're still flat or falling." Labour market conditions were also mixed. Otago had the strongest employment growth in the country, up 8%, while Taranaki recorded the steepest employment drop at -8%. Retail sales remained subdued and below their average levels in most regions, with Wellington recording the steepest at -3.3%, while regions such as Waikato, Northland and the Bay of Plenty improved slightly on last year. Consumers were still being cautious, Kerr said, "They're rebuilding balance sheets, not rushing to the shops just yet." 'Time for the Reserve Bank to step on it' ADVERTISEMENT Kerr told 1News he would like to see the Reserve Bank "go from having their foot firmly on the brake, to putting it in neutral, to actually putting their foot on the accelerator". He believed the Official Cash Rate should fall from its current position at 3.25% to 2.5% to provide meaningful stimulus to the economy. "We think the risk, if anything, is that inflation falls too far and falls below 2% because the economy is so weak. So, job done on the inflation front, it's time to stimulate growth."
