"That anaemic growth compares with 6.9 per cent in Auckland. Over the past five years our growth rate has been barely half the national rate."
He said the Government needed to focus more on regional New Zealand.
"The situation is dire. No amount of studies is going to get our region back on track."
Statistics New Zealand said the increase was a benefit from construction and manufacturing, but this was offset with a decrease in agriculture.
The local economy increased 12.9 per cent, below the national average of 24.2 per cent.
The national contribution equated to 3.8 per cent or $9.2 billion.
Mr Clifford said the number of people leaving the region was continuing to decline, while the number of those arriving from Australia was increasing.
"We know that growth in the construction industry has tremendous flow on effects for the local economy. It employs a lot of people from labourers to architects and also provides more work for timber merchants and other suppliers."
Mr Lees-Galloway said the Government needed to do more to entice investment in the region.
"Simply sitting on the sidelines and hoping for the best is not enough.
"We also need to consider the role the public sector can play. Not every public sector head office needs to be in Wellington.
"Palmerston North would be an excellent place to locate one or two Government agencies."
