Business confidence in the Bay of Plenty has "slipped" according to a new report but leaders say the region will fare better than others despite the "severe recession".
The Westpac Regional Economic Confidence quarterly survey released this week said confidence had dipped by 2 per cent on the previous quarter and there was weakening optimism in the region, which reflected the impact of Covid-19.
Only 3 per cent of households expected economic conditions to improve over the coming year.
Hardest hit were key industries, such as forestry, ex-food manufacturing, construction, hospitality and non-essential retail.
However, the performance of the kiwifruit industry, which got off to a flying start with growers posting a record harvest, "is likely to have buoyed spirits".
Westpac industry economist Paul Clark said the country was going into a "severe recession" and Tauranga was likely to perform better than Rotorua which had vested in tourism.
But the Bay of Plenty was in good stead compared to places like Otago which also relied heavily on foreign tourists, he said.
Rotorua mayor Steve Chadwick said the optimism was heartening as the country focused on standing up its local economies again.
"Key sectors have suffered major impacts already and we know there is more to come so we won't get a longer-term view for a while yet."
Chadwick said insights from four key sector groups were vital to Rotorua's Build Back Better economic recovery strategy.
Economy cools in the region; tourism and forestry to bear brunt
"One group has centred on identifying opportunities for positioning Rotorua as a centre of excellence for forestry and leveraging our 'wood first' position.
"The work of these groups will come to us soon to see how council can contribute and support the opportunities identified."
Rotorua Chamber of Commerce chief executive Bryce Heard said it was interesting there was such a wide variation in confidence across the country.
Economic confidence in Otago was down 33 per cent it was up 14 per cent in Hawkes and down 2 per cent in the Bay of Plenty.
"We are lucky to have a variety of sectors including, forestry, agriculture, and horticulture, which were all going okay.
"At the end of the day, business confidence drives investment, investment drives growth and growth drives jobs."
Red Stag Timber chief executive Marty Verry said downturns like these often shook out those with high debt or low margin relative to competitors, while those with invested in automation, technology and productivity tended to do okay.
"The unknown is the duration it will take to get tourism and migration running again," he said.
"New Zealand needs to have a plan for two to three years' time for the worst-case scenario that there is no vaccine. That's the period I'm less optimistic about."
Hospitality New Zealand regional manager for the Bay of Plenty Alan Sciascia said hospitality was an essential part of Bay business and would be "critical to our recovery".
Sciascia said pre-Covid-19 it accounted for more than $600 million in annual revenue and provided employment for more than 7000 full and part-time workers.
"An estimated $200m was earned by Bay hospitality workers annually and these workers all rely on a buoyant hospitality sector for continuing employment.
"After a long period of closure during lockdown, combined with the loss of international tourism, the sector is now dependent on domestic tourism for survival until such time as the international tourists are able to return."
Retail NZ chief executive Greg Harford said it was no surprise there had been a drop in confidence and optimism in the Bay.
"The region has been hit hard by the economic impacts of Covid-19, particularly from a downturn in visitor numbers that is significantly impacting retail and hospitality businesses."
Harford encouraged people to shop local because supporting local businesses would help keep people in jobs.
"Local customers are increasingly value-driven, and looking to spend less overall. This will flow through and make it harder for already struggling retail and hospitality outlets."
Zespri's total operating revenue for the 2019/20 season was $3.36 billion, up from $3.14 billion.
Chief executive Dan Mathieson said it was an incredibly encouraging year, with the industry working hard to manage quality and deliver more than 5 billion pieces of kiwifruit to people worldwide.
Mathieson said the Bay was now home to an increasingly large and diverse range of organisations and businesses who took great pride in their products and ambitions to grow their businesses and the contributions they made to the local economy.
"It's important that we all continue to work together to produce high-quality goods and services that are in demand in New Zealand and around the world, as well as supporting our local communities."
New Zealand Kiwifruit Growers Inc chief executive Nikki Johnson said it estimated about $1.45 billion was pumped back into the Bay of Plenty economy this season.
The industry had also provided thousands of seasonal jobs during the harvest including New Zealanders displaced from work because of Covid-19.
The pandemic was a huge challenge but "this season will certainly be one of the largest for fruit volume harvested".