Economist Cameron Bagrie says a lack of labour could stifle Southland's full economic potential.

Mr Bagrie resigned last year as ANZ's chief economist and set up his own research firm, which has included working with the Invercargill-based SBS Bank.

During a visit to Invercargill this week he suggested Southland's biggest problem was its population.

"Things at the moment are what you call solid. The good news story is obviously the improving dairy prices is a big shot in the arm for the region.

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"[Southland] has got the lowest unemployment rate around the country, which is a good thing. But it is also a challenging thing because you have got to find the staff.

"It is not a question of getting the orders; you can get the orders but you've actually got to meet the orders.

"Which means finding labour is a big problem," Mr Bagrie said.

Mr Bagrie believed there was a lot going for the Southland region, saying Southland was "more than a one-shot wonder" in terms of its dairy farming.

"You've got an awful lot of export intricacy across the red meat industry, there is a bit forestry down here and forestry has been going pretty well. You've got seafood coming up, as well."

However again he stressed it came back to people, or the lack of them in Southland.

"The biggest issue for a region like Southland is just outright population. It is enticing people to come in.

"House prices are affordable, yields on property is still reasonable, so it is still an attractive investment destination. But it is just a question of getting the people.

"It is a real challenge for business at the moment. You are top of the pops in terms of unemployment rates, and of course that is a major economic headache, because you've got to get more staff."

Mr Bagrie believed it was important the Government realised immigration was important for regions like Southland to help provide the workers needed.

"It is a political hot potato. What you saw talked about pre-election was the idea of a migration target down around 20,000. Thankfully, those sort of discussions have been dropped."

Minister of Small Business Stuart Nash told a business gathering in Invercargill this month the introduction of "provincial visas" was in pipeline, to ensure migration into the regions did occur.

Acting Primer Minister Winston Peters told the Otago Daily Times, following a dinner event in Invercargill on Wednesday night, that the Government was a "couple of months" away from firming up the details of those provincial visas.

It would be modelled on a Canadian policy, where immigrants were placed into the regions instead of heading to big cities like Vancouver.

A Southland Regional Development Strategy group has set a target of attracting 10,000 new people to the province by 2025 to try to ensure Southland has enough people.

- Logan Savory