KiwiBank chief economist sees positive outlook during Hawke's Bay visit.

Kiwi Bank commercial manager Garth Duncan and bank chief economist Jarrod Kerr at the Kiwi Bank regional centre in Hastings. Photo / Warren Buckland

Businesses in Hawke's Bay remain "upbeat" about the region's economy and the chief economist of the only New-Zealand-owned bank believes people have good reason to be.

Just three months into his role as KiwiBank chief economist Jarrod Kerr visited Hawke's Bay before the bank put out a new regional economic forecast for the region next week.

"I came down here as part of an information-gathering exercise, talking to our branches and our customers, and from what I've been told it's pretty good.

"The economic numbers are out there: House prices are running really well, population growth has improved a lot. When you start looking at the numbers for the region, it's very strong and the outlook is good."

The problems highlighted during his visit were mainly down to "growing pains".

"I've been quite surprised, actually, at how upbeat people are today and I think that's great.

"This is one of the regions that stands out as being a strong performer for us. We haven't put our numbers together yet but this is one region we are probably most upbeat about."

However, more investment would be needed to keep the local economy at that level.

More investment would pave the way to better long-term growth but more money needed to be invested into the regions to make them a viable option for increasing migration flow - both from overseas and Kiwis moving back from Australia.

"Australia is going through a bit of a slow period but their outlook's fine, I think New Zealand has slowed a little bit but our outlook is better," Kerr said.

"The New Zealand outlook is really good - the next couple of years will be a bit touch and go but on a long enough timeframe New Zealand's outlook is far better than a lot of countries'."

That was due to its location, "in the coolest part of the planet", next door to the growth engines of the future - China and India.

Kerr pointed out that a planned increase to the minimum wage in New Zealand was "a double-edged sword" but hopefully it would be a "fire-starter" for a more broad-based rise in wages and income.

"But our business customers, obviously, are nervous."

Increased costs to business from the minimum wage increase would make people thinking of reducing staff or increasing automation more likely to do so, he said.

"In our forecasts, we have things slowing down as the minimum wage gets towards $20. While we have things slowing down in the next year or so, getting to 2020 and 2021 we see things tapering off."

Kerr pointed out that the region, like the rest of the nation, would have to keep an eye on what happened in Auckland for a clue as to their prospects.

"When you have a city like Auckland, which is highly unusual in that it has about 40 per cent of your GDP in one concentrated area, it has a large impact on the regions. "

Kerr's findings echoed a new report showing households in the region remained positive about the economy.

A net 31 per cent of Gisborne and Hawke's Bay households expected their regional economies to prosper over the coming year, according to the latest Westpac-McDermott Miller Quarterly Regional Economic Confidence survey - a fall of just 1 per cent from the previous quarter.

Westpac chief economist Dominick Stephens said: "The region remains relatively upbeat as people continue to migrate from some of the larger cities in New Zealand to pursue a change in lifestyle.

"Rising house prices, low unemployment, elevated prices for horticultural products and increased attention from Government are also helping to support the positive tone in the region."