Region ‘turning an economic corner’, but resilience needed
The Nelson Tasman economy is showing early signs of recovery, despite cost pressures remaining high, says Infometrics principal economist Brad Olsen.
But that followed a particularly difficult year for the region, and businesses needed to make sure they were resilient as it faced continued uncertainty from overseas, and more natural disasters.
Olsen told the Nelson Regional Development Agency’s annual general meeting on Wednesday the region was “turning an economic corner”, after two years of economic turbulence.
Photo: MARTIN DE RUYTER / Nelson Mail
Nelson Tasman GDP grew 2.7% in the year to June, with national GDP growing by 1.7% on average, Infometrics data showed.
“We’ve been surprised ourselves at these figures,” he said.
“When we first looked at the Iran war emerging and the cost pressures that was starting to bring through, we did basically expect that the second quarter would have economic activity down.”
Outside fuel purchases, core spending activity lifted, he said.
“I think … everyone feels a bit more comfortable navigating these weird and wonderful times.”
Higher residential building consents showed people were “recalibrating what normal looks like”.
While the country’s job market was taking a lot longer to turn around, the region’s 4.1% unemployment rate in the year to June was below the 5.4% national average.
Agriculture, forestry and fishing were leading emerging job growth in the region. The region benefited from good primary sector returns, including a surge in apple exports.
The region was “holding its own” in tourism growth. But 75% of travellers to the region were domestic, and analysis showed domestic Air New Zealand travellers were still 12% below pre-pandemic levels.
Businesses continued to face cost pressures as the situation in the Middle East remained unpredictable, with recent developments driving oil prices up again.
Inflationary pressures were also starting to come back “a bit more”.
Diversification of industries was critical to increase their resilience, he said.
Nelson Tasman was well-positioned to leverage global demand in sectors like aquaculture and the knowledge intensive economy.
While a challenge nationwide was commercialising research and development work, continuing efforts towards that in the region had big potential to unlock more growth.
There were also opportunities in low alcohol beverages as people consumed less alcohol, and high protein exports as more people started using weight loss drugs.
Higher regional GDP was partly because “last year was tough”, with the region hit hard by the closure of manufacturing operations and widespread flooding.
Businesses shouldn’t “wait for normal to come through” before moving forward.
During Covid uncertainty, the best move for businesses was to “stay still”, Olsen said.
“I worry that the worst move is to do that now … not try and make some changes”.
“If you’re waiting for clearer air in the business world, you’re probably going to be waiting a long time.”
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