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Kiwis lack confidence in most regional economies

By Ben Chapman-Smith

Canterbury was one exception to the national trend, with confidence rising in the region in expectation of the rebuild boom. Photo / Geoff Sloan
Canterbury was one exception to the national trend, with confidence rising in the region in expectation of the rebuild boom. Photo / Geoff Sloan

New Zealanders have lost confidence in their local economies in almost every region, according to a survey out today.

Canterbury bucked the trend, with economic confidence surging to its highest level since the February 22 earthquake.

The Westpac McDermott Miller Regional Economic Confidence Survey of the second quarter asked households about their expectations for their local economy over the coming year.

Seven of the eleven regions were pessimistic on balance, with a national average of net 4 per cent expecting bad times over the next year.

Regions with a strong export base or international focus, such as Waikato, Otago, Southland, Auckland and Taranaki/Manawatu-Wanganui, all experienced a sharp decline in economic confidence.

Wellington was now the second most pessimistic region in the country after Northland. Public sector cuts weighed heavily on households in the capital, where a net 24 per cent said they expected bad times for the region over the next year.

This is down from a net 18 per cent in the first quarter of 2012.

Things were more upbeat in Canterbury where economic confidence rebounded from three months ago. Optimistism in the region is up from a net 8 per cent in the first quarter.

On balance 25 per cent of households now expect good times for the region over the year ahead, making Canterbury the second most optimistic region in the country behind Southland.

Westpac senior economist Felix Delbrück said confidence had risen as the early stages of the rebuild got underway.

"It's clear that some parts of the region are struggling but things have definitely been happening in recent months," he said.

"Economic life has been returning to something of normality."

Conducted over June 1-10, the 2012 quarter two survey spoke to 1570 households.

Northland's confidence remained the lowest in the country, despite being one of only two regions that saw regional economic confidence improve over the past three months. A net 33 per cent of households expected mainly bad times ahead.

Aucklanders are now pessimistic on balance, with a net 4 per cent of households expecting mainly bad times over the year ahead. A net 7 per cent felt the opposite to this in the first quarter.

Delbrück said Auckland was at an economic cross currents.

"Auckland's pretty exposed to the global economy and there are lots of worries about that.

"At the same time, Auckland has seen some of the biggest house price increases of the past year. Broadly, there are as many optimists as pessimists."

A fall in confidence in the Waikato has come after Fonterra confirmed a lower payout forecast for the season ahead. Pessimists now outnumbered optimists by 6 per cent, compared to a net 22 per cent feeling positive in the March quarter.

Economic confidence in the Bay of Plenty improved since December, after the Rena oil spill, but was still lower than many regions at net 16 per cent pessimism. The region still faced challenges from the PSA blight.

Southland is the most optimistic region in the country where a net 32 per cent feel optimistic about the year ahead. This is down from a net 43 per cent feeling good in the March quarter.

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