It's Dunedin's billion-dollar business.

The importance of the University of Otago to the city was underlined by figures released yesterday.

The university's annual economic impact report for last year puts spending in Dunedin directly related to the university at $1.044billion.

That is actual spending by the university and estimated spending by staff and students.

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Otago Chamber of Commerce chief executive Dougal McGowan said the figure was another reason to celebrate the success of education in the city and highlighted the city's role as New Zealand's education capital.

''We get a massive boost in population and employment.

''It also creates that social vitality that we see, and we saw it at the weekend with the capping procession,'' he said.

Otago Southland Employers Association chief executive Virginia Nicholls said it was a ''wonderful'' achievement to inject more than a billion dollars into the city economy, and also for the university to contribute more than $2billion to the wider New Zealand economy for the first time.

Dunedin Mayor Dave Cull said the city had ''long enjoyed the University of Otago as a cultural partner'' and over the years the university had ''also grown to become the economic engine of Dunedin''.

''The city enjoys a close relationship with the university, particularly in developing educational and economic links overseas, especially in China,'' Mr Cull said.

The university contributed about $1.163billion nationally via its sites in Dunedin, Christchurch, Wellington, Invercargill and Auckland, according to its figures.

If the indirect, or flow-on expenditure was taken into account, the total spending in Dunedin increased to $1.8billion, and just over $2billion nationally.

For example, indirect expenditure occurs when the university buys supplies from a local business and that business, in turn, needs to employ staff and buy raw products from another supplier to meet the demand.

The university used a ''standard economic contribution methodology'' to estimate its economic impact, a report, considered by the university's council yesterday, said.

The university had 18,800 equivalent full-time students and 4080 full-time equivalent staff across all its sites in 2018.

The Dunedin campus had about 92% of students and 87% of all staff.

Vice-chancellor Prof Harlene Hayne said the university estimated it, directly and indirectly, supported 16,265 jobs in Dunedin, a further 892 in Christchurch and 830 in Wellington.

- Otago Daily Times