Regional economy shrank a bit last year

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

The tough economic environment being felt by many local businesses has provisional numbers to it with the Infometrics December 2023 quarterly economic monitor, released on the Trust Tairāwhiti website last week, showing a 1.8 percent contraction in GDP for Tairāwhiti last year compared with 0.7 percent growth for the New Zealand economy. For the quarter, Infometrics’ provisional estimate was a 2.1 percent per annum (pa) fall in economic activity here.

On the plus side, consumer spending remained solid — up 4.3 percent, the same as the national figure, to a total of $696 million spent; however, annual inflation of 4.7 percent negated this increase.

The number of businesses in the region was up 1.5 percent, higher than the nationwide increase of 1.1 percent.

Employment of Tairāwhiti residents was up 0.7 percent on average over the year — slower growth than the 3.1 percent national average. Jobs growth locally had been driven by hiring in construction and health; primary sector and retail employment was lower.

Unemployment here was 4.5 percent compared with 3.7 percent nationally.

Infometrics said the Tairāwhiti economy remained subdued due to lingering effects of Cyclone Gabrielle alongside more challenging primary sector outcomes and household spending pressures.

Sheep and beef farmers were facing lower prices, with a 19 percent decline in mutton prices and a 42 percent decline in lamb prices (to a seven-year low) alongside an 8.5 percent drop in beef prices at the end of 2023. Slaughter volumes in the 2023 calendar year for Hawke’s Bay/Gisborne were 7.2 percent below a year ago, compared with a 0.8 percent pa rise across the rest of the country.

Forestry prices appeared to have stabilised at lower levels, but weak offshore demand and lower prices meant annual roundwood removals were 9.3 percent lower than pre-pandemic levels nationally.

Construction outcomes were mixed:  non-residential consent values were down 34 percent pa over 2023 but residential consent numbers were up 13 percent pa, “and there is a considerable amount of infrastructure work ongoing that is likely keeping construction activity higher overall”.

House prices, sales and new listings were all lower than a year ago, as mortgage repayment affordability limited activity. “More pressure appears to be hitting some in Tairāwhiti, with an 8.2 percent pa increase in rents over the last year, as well as higher Housing Register waitlist numbers. Public housing numbers are higher and emergency housing grants lower, showing some are getting more support, but challenges remain.”