FOR RDP: An aerial view of Rotorua. Photo / Getty Images A_GettyImages-1168142401.JPG
Priority One chief executive Nigel Tutt. Photo / File A_070317jb28bop.JPG
Tauranga Chamber of Commerce chief executive Matt Cowley. Photo / George Novak A_210720gn25bop.JPG
Red Stag Timber group chief executive Marty Verry. Photo / Supplied 092820_MartyVerry_RDPzhs.JPG
GRAPHIC: Called 'Regional_economic_confidence1' in sharepix
By Zoe Hunter
The Bay's economic fortunes have lifted according to a new survey which says the return of Aucklanders may help boost the region's accommodation and hospitality sectors.
However, a lack of international visitors including cruise passengers could hamstring a return to normal confidence levels.
Bay households are the third most optimistic in the country according to the Westpac McDermott Miller Regional Economic Confidence September quarter survey.
The survey showed a net 8 per cent of households expected the region's economy to improve over the year.
Westpac chief economist Dominick Stephens said the Bay had been one of the more confident regions in the country.
He said the rise in confidence might reflect an improvement in forestry during the last quarter and a strong kiwifruit industry.
"Looking ahead, the return of Auckland visitors may help the region's accommodation
and hospitality sectors, boosting sentiment further.
"But the lack of international visitors, including cruise passengers, may hamstring a full return to normal confidence levels over coming quarters."
Stephens said the low-interest rates were driving the Bay's housing market upwards but he expected the construction sector to begin to slow.
"Tauranga, in particular, is a place that's quite exposed to population growth," he said.
"But the country's net migration has gone to zero and population growth is much lower, which could result in a slower construction sector."
Priority One chief executive Nigel Tutt said the Bay had recorded better outcomes than other regions.
Tutt said the Western Bay economy would bounce back "as long as people keep spending money here and supporting local companies".
"We continue to remain fortunate with our primary industries, including kiwifruit and the Port of Tauranga, and will probably be better off than most other regions."
Tauranga Chamber of Commerce chief executive Matt Cowley said the wage subsidy, strong primary sector and continued population growth had aided the region's recovery.
Cowley said many Western Bay businesses were looking forward to Christmas and a busy summer tourist season.
"It will hopefully replenish cash reserves to help the most vulnerable industries get through what could be a tough winter next year."
He said everyone should be mentally and financially planning for another escalation of alert levels over summer.
"We need to improve the resilience of businesses and their owners as the fight against Covid-19 is not over yet."
Rotorua Chamber of Commerce chief executive Bryce Heard said economic confidence was "see-sawing" due to the on-again off-again nature of Covid-19 outbreaks.
"The end of the first Covid wave taught us there is a much larger than expected appetite for domestic tourism among the Kiwis who normally take overseas holidays but cannot do so at present, due to Covid.
"Couple this with large injections of government PGF funding into Rotorua ($117m in July and another $18m into the forestry sector since) and there is a lot going on at present in Rotorua."
However, Heard said there was still plenty of business nervousness around what happened after the general election and the end of the "money scramble" and the ability to manage the borders forward.
Heard said to grow confidence the first target was maintaining a level 1 restriction and setting up an Australasian bubble of some kind.
"We must take this chance to innovate ways to get domestic and Australian tourists safely to and from our town.
"Airways services will be a key part of this puzzle. If we can solve it, this will be the key to keeping our economy moving forward positively through the pandemic."
Tourism Bay of Plenty head of destination marketing Kath Low said tourism, like many sectors, was hurting and the fallout will compound the longer New Zealand's borders remained closed.
Low said Ministry of Business Innovation and Employment data showed Auckland visitors contributed $201 million to the local economy in the year ending June 2020 - about 20 per cent of the region's total $1 billion visitor spend.
"Auckland visitors are the Coastal Bay of Plenty's second-largest visitor market behind Waikato. We are pleased that Aucklanders can safely return to the Coastal Bay of Plenty again."
Red Stag Timber group chief executive Marty Verry said sentiment felt strong in the forestry sector and the wider region.
"Forestry and now particularly wood products are starting to be recognised by government procurement and building regulation for their key role in preventing climate change by displacing concrete and steel.
"The sector will be watching to see that these new government rules are fully implemented, especially the requirement for government departments to build with materials with the lowest upfront carbon emissions."
Verry said investments in a new factory opening in 2021 to fabricate the "construction wonder-product" – Cross-laminated Timber, or CLT – were examples of this confidence.
"As investors in the main mountain-biking hub tourism facilities, Red Stag has also seen a significant increase in usage, and that looks set to continue for the next two summers under international travel restrictions.
"Tourism and hospitality operators have seen off winter and will be looking forward to summer and more public holidays.
"Alongside strong dairy and horticulture sectors, the region is well diversified and well-positioned."
Rotorua Economic Development executive manager of investment, growth and intelligence, Rebecca Wright, said 2020 had been a tough year for Rotorua given the impact of the Covid-19 pandemic on the tourism and forestry industries.
But she said it was great to see economic confidence slowly rebuilding in the Bay and the district was fortunate to have an economy built on a diverse range of industries.
"The tourism, retail and hospitality sectors have had a roller coaster quarter with a very strong July, before August's increased alert levels reduced the number of visitors to the city.
"A level of uncertainty is likely to continue into the next quarter, although a strong school holiday period and a busy Labour weekend in October will help."
Zespri head of communications and external relations Michael Fox said it was encouraging to see confidence remain relatively strong.
"While this season has been challenging there's certainly been great support from the local Bay community and that's been crucial in enabling the industry to safely pick, pack and ship this season's fruit."
Fox said demand for kiwifruit remained strong and the company's focus remained on delivering strong returns to growers, supporting community partners and creating jobs and opportunities.
• Regional economic confidence reflects the difference between the percentage of
survey respondents that expect economic conditions in their region to improve and
those that expect prospects to worsen over the next 12 months.
• Sample sizes and margins of error vary by region. The survey was conducted over September 1-10 2020, with a total sample size of 1559.