A recent survey of regional economic confidence across New Zealand has shown Southland drop by 30 points, the second-largest fall nationwide after Auckland. 

The drop reflects falling regional economic confidence across most of the country, caused by cost-of-living increases and falling house prices, says Westpac Acting Chief Economist Michael Gordon.

“The impacts of rising costs of living and falling house prices were widespread – all regions across the country were in pessimistic territory over the quarter,” he says. 

The drop in Southland is especially notable, given the region was one of only two with positive growth in economic confidence at the last survey in March 2022. 

Graph showing Southland's regional economic confidence since 1988. Image: Westpac McDermott Miller/Supplied

Westpac McDermott Miller, who run the economic confidence survey, say the situation for Southland may improve later in the year. 

“We put the plunge down to the autumn drought hitting the region, with a medium scale adverse event declared at the end of March.”

“A lack of processing capacity in the region’s meat processing facilities is likely to have also weighed on sentiment. Looking through the drought and the meat processing issues; the underlying picture of the region’s agriculture sector remains very healthy,” they say. 

“On this basis, we expect Southlanders’ outlook for their regional economy to improve over the remainder of the year.”

The economic confidence of many other regions across the country may continue to fall, says Gordon.  

“From here, we expect that the ongoing rises in the cost of living and further falls in house prices will continue to weigh on regional economic confidence in most regions over coming quarters.”

Unlike Southland, Otago saw a grow in economic confidence of 17 points, put down to the return of domestic and international tourists.

Bay of Plenty, Gisborne/Hawke’s Bay and Taranaki/Manawatū-Whanganui saw moderate growth, while all other regions dropped.