The diversity of the Bay of Plenty's economy has been credited for helping the region make a strong recovery from Covid-19. And a new report suggests the region will continue to be a top performer.
The Westpac Regional Roundup report, released yesterday, 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 was 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 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 and rising sales volumes suggested robust market activity. This supported spending in the region with retail sales rebounding strongly, he said.
However, parts of 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 contributed to an increase in regional unemployment.
OneRoof editor Owen Vaughan said the Bay of Plenty was fortunate not to be fully reliant on a single industry for its economic health, meaning that while one area might have suffered other sectors can help buoy the overall region.
"So tourism, while dented, is not the main driving force of Bay of Plenty economy. There's enough diversity there, that's one of the reason why people in the Bay of Plenty are so confident to take advantage of those low-interest rates and investors are coming back into the market," he said.
"Rotorua, where you would expect to be more affected than what it has been, has largely not been negatively affected in the housing market."
Vaughn said the Bay of Plenty housing market's health was largely a reflection of the region's economy, rather than a driver of it.
Tourism Bay of Plenty chief executive Kristin Dunne said this week that although some tourism outlets were experiencing a strong season with domestic visitors, others were still hurting from the lack of international tourism.
This sentiment was reflected by Rotorua tourist outlets such as the Secret Spot and Velocity Valley.
In Rotorua, key tourist outlets Rainbow Springs and the Agrodome remained closed.
Rotorua Chamber of Commerce chief executive Bryce Heard said the report was consistent with their observations.
"I think we are underestimating the effect of the high NZ dollar [US$0.72] on our primary sector income."
Tauranga Chamber of Commerce chief executive Matt Cowley agreed that the local economy was going "relatively well compared to other regions".
"We're behind on last year, but are definitely doing much better than most people thought six months ago," he said.
"Our export success has been our largest saviour with our main export partners – China and Australia – managing the pandemic better than Europe and the Americas."
Cowley said his biggest concerns included the global rollout of the vaccine, the lack of low-skilled labour in many parts of the Bay economy, and the ability for business owners to deal with another year of significant uncertainty and investment to change their business.
However, a single-party government with a mandate to tackle big issues such as overhauling the RMA was encouraging, he said.
A possible labour shortage because the borders were closed was noted in the report as a "fly in the ointment".
In the forecast for 2021, the report referred to the Bay's agricultural sector as key, with growers expected to benefit from strong demand for kiwifruit in certain export markets.
A fast-recovering China was expected to help lead log prices higher over the coming year also, meaning a positive outlook for the local forestry sector.
Red Stag Timber chief executive Marty Verry said the economy was strong now and he, like the report, anticipated a healthy year ahead.
Meanwhile, the kiwifruit industry was "booming", said New Zealand Kiwifruit Growers Inc (NZKGI) chief executive Nikki Johnson.
Johnson said kiwifruit was valued at $1.52 billion, which was returned to Bay of Plenty communities in 2019/20.
"Sourcing seasonal labour remains an ongoing issue in 2021 and NZKGI is working to ensure the industry is as prepared as we can be to address the shortage caused by lower numbers of backpackers and the reduction in RSE workers brought about by border restrictions."
Continuing to implement a labour attraction strategy to source seasonal kiwifruit workers would be one of the group's highest priorities for 2021, Johnson said.
Regions with a large manufacturing or distribution base, such as Tauranga, were expected to benefit from e-commerce as more people shop online.
However, the report noted this could have a negative impact on the vibrancy of smaller town centres.