Bay of Plenty economy has "underlying strengths"

The Psa outbreak and the effects of the Rena stranding have been blamed for a sharp fall in the Bay of Plenty's economic position relative to other regions.

But APR Consultants' Deryck Shaw says ASB's Regional Economic Scoreboard does not fully reflect the resilience and broad, underlying strengths of the region.

Along with Northland, Hawke's Bay and the West Coast, the Bay of Plenty rates one star out of five, based on its share of the national economy and growth in population, employment, retail, house prices, construction and new car sales for the December quarter.

The report states the region's sharp fall from second place earlier in 2011 "likely reflects the effects of the Psa outbreak on the kiwifruit producing region and the fall-out from the Rena shipwreck on its tourism industry".

But Shaw told The Daily Post the scoreboard is based on a relatively narrow range of indicators that do not take into account the region's broad economic base and not factoring in strengths in areas such as forestry, wood processing, tourism and the dairy sector.

"Performance may not be good now, but there is an underlying robustness in the Bay economy. It is quite broad."

While he said Psa had, undoubtedly, affected the kiwifruit industry in the Bay of Plenty, most of the growers he has spoken to were now containing and managing the disease effectively and business, generally, was suffering more from reduced investment confidence.

"In the past few years, there has been so much uncertainty and banks, investors and existing businesses are more cautious about investing."

Shaw said it was difficult to speculate on how much of the ASB rating was attributable to Tauranga and how much reflected what was happening in Rotorua because the economies were, in some ways, quite interdependent.

According to Rotorua data collated by APR Consultants, car registrations were down 3.7 per cent, retail activity was up 4 per cent and real estate activity was up 2.2 per cent in the year to December. Shaw said building consents and visitor arrivals were both down in the year to November.

He said there was a lag between recording data and releasing the analysis and December figures were not necessarily reflective of what was happening now, with visitor numbers picking up a bit in recent months.

"It is a challenging environment, but there are pockets of activity and some businesses are doing well.

Businesses with good strategies around the current trading environment and with a bit of flexibility and depth have been doing reasonably well."

Shaw said businesses less able to respond to changing conditions and markets were finding it tougher.

Rotorua Chamber of Commerce chief executive Roger Gordon described the ASB scoreboard result as disappointing, but agreed Psa and the Rena grounding had affected the region's economic performance.

 

"The impact on Tauranga, as major as it was, will do much to influence the impact on the whole of the Bay of Plenty."

While the continuing high New Zealand dollar was not helping forestry and inbound tourism, Gordon said the feeling from chamber members was that many of them had been "holding their own" last year.

"We are finding that a number of our businesses are still struggling to pick themselves up after the economic downturn. This is particularly so with small businesses, which have not the cushion of reserves to see them through hard times."

BAY OF PLENTY FIGURES

Share of the New Zealand economy: 5.1

Population growth: +0.7 per cent

Employment growth: -3 per cent

Retail growth: +9 per cent

House prices: -0.6 per cent

Construction growth: -26 per cent

New car sales growth: 0 per cent