The Bay of Plenty economy is making a strong recovery from the devastating impact of Covid, according to a report published today.
And it looks like the region will continue to be a top performer.
The Westpac Regional Roundup report shows the severity of the post-lockdown recession and the pace of recovery differed between regions in New Zealand.
Those that relied heavily on agriculture and forestry, such as the Bay of Plenty, were among the strongest performing, benefiting from a strong horticultural season and slightly better log prices.
The Bay of Plenty is expected to continue to be one of the top-performing regions in the country over the coming year.
Report author and industry economist Paul Clark said the Bay's economy proved resilient in the face of Covid-19.
This was mainly because of the export performance of its large horticultural sector which was able to operate as an essential industry even when restrictions on activity were in place elsewhere, he said.
"The lifting of these restrictions has further spurred economic activity in the region. The region's large forestry sector, for example, is now running at full capacity to meet the demands of a resurgent Chinese economy. And with demand having firmed, so too have log prices."
The region's house prices, underpinned by record-low interest rates, had accelerated sharply while rising sales volumes suggested robust market activity. This supported spending in the region with retail sales rebounding strongly, he said.
However, the Bay's tourism sector had struggled. Spending by Kiwis from other regions was not enough to offset the loss of international visitor arrivals, resulting in the closure of some businesses and subsequent job losses, which in turn contributed to an increase in regional unemployment.
While regions with a large rural backbone were expected to perform well over the coming year, "one fly in the ointment might be possible labour shortages due to the closure of the border".
Looking ahead at 2021, Clark said the performance of the region's agricultural sector was key.
Growers were expected to benefit from strong demand for kiwifruit in key export markets, "which should keep prices at elevated levels" that would support spending.
"The outlook for the region's forestry sector is also looking positive, with a fast recovering China expected to lead log prices higher over the coming year."
The Bay of Plenty's housing market should continue to perform well, driven by low interest rates. However, weaker population growth is set to slow construction activity over the coming year.
Regions with a large manufacturing or distribution base, such as Tauranga, were expected to benefit from e-commerce as more people shop online. However, Clark noted this could have a negative impact on the vibrancy of smaller town centres.