Whanganui's diverse economy in its favour, says Infometrics

Provincial regions like Whanganui will be key to New Zealand's economy for the foreseeable future.

Whanganui's diverse economy could be in its favour in the longer term as analysts predict the provinces will dominate growth in New Zealand's economy for the next 18 months.

The latest economic forecasts from Infometrics say the outlook is good for provincial economies, building on the recovery of dairy prices during 2016.

Infometrics chief forecaster Gareth Kiernan said spending activity in the regions was "comfortably outpacing" activity in the main centres, with commodity prices for most exports holding at high levels.

"Many of the drivers of urban growth have peaked, including migration, the housing market and construction activity," Kiernan said.

"Most of the New Zealand economy's momentum over the next 18 months will come from provincial areas, thanks to strong export incomes."

Whanganui Chamber of Commerce chief executive Marianne Archibald said while growth in the regions was good news, some export markets may not be sustainable in the long term.

"We need to be careful around relying on exports for dairy and gas and oil," Archibald said.

"Whanganui is really lucky in that regard in that we do have a diverse economy.

"The Government's Provincial Growth Fund gives regions like Whanganui the opportunity to get some really major plans under way to ensure that regional growth continues.

"Wages are set to rise by regulation and that will put a strain on some businesses. There's the potential for wage growth to seep back into the local economy and possibly lift inflation a bit."

Philippa Ivory, general manager of economic agency Whanganui & Partners, said it was a good time for people to move from the main centres to the regions.

"Places like Whanganui have so much to offer people," Ivory said.

"If you're in your 20s or 30s and wanting a 'Kiwi lifestyle' you can get so much more in Whanganui.

"There's a good range of employment opportunities in Whanganui being advertised [online] at the moment.

"We want to bring more 20- to 30-year-olds to town so we need more jobs and training opportunities. UCOL and the flight school are doing really well and UCOL will be starting some vocational training courses in August."

Whanganui was attracting businesses from other areas to move here, Ivory said.

"I have a list of five high quality businesses, who have a large quantity of money to spend, that want to come to Whanganui. They can see the potential.

"I see provincial New Zealand as the future of the country."

Kiernan said the growth in the provinces would not be enough to prevent New Zealand's economy cooling during 2019. However, the slowdown was likely to be less marked than previously feared.

Risks for provincial areas included the effects of M. bovis, labour shortages and the potential for a weakening global economy due to US-China trade ructions.

"It's important that none of these issues significantly undermine provincial growth over the next 18 months," Kiernan said.

"Low business confidence suggests that domestically focused firms are already reluctant to invest or hire. Households are also becoming more cautious about their spending in the face of higher fuel prices and the slowing housing market.

"The New Zealand economy needs the continuation of good export conditions to maintain a solid growth performance between now and 2021."