Stellar growth in Queenstown failed to buoy Otago's overall economic confidence, with the province being one of five across the country showing a decline in sentiment, although still in positive territory.
Changes in sentiment were mixed across New Zealand's 11 regions in the quarter to June.
Six regions were now more positive about where their local economy was headed, while five were more negative, the Westpac McDermott Miller survey of 1555 households found.
Westpac's industry economist David Norman said the general weakness continued in dairying regions but had not become more pronounced, possibly because global dairy prices had stabilised during the past three months.
"There is little reason to expect a sharp rebound in dairy region confidence in this environment,'' Mr Norman said.
Westpac maintains one of the more optimistic dairy forecasts, albeit for another low payout of $4.60 per kilogram of milk solids, against Fonterra's early forecast, which is even lower at $4.25.
Mr Norman said regional economic confidence fell again in Otago, with a net 7% of households believing the region's economic fortunes would improve over the coming year, down from 11.9% in March and 36.6% in the quarter to last December.
"The farming backbone of the region is experiencing challenging conditions, which may be driving this weaker result, as the Queenstown-Lakes district is a relatively small part of the overall employment picture,'' Mr Norman said.
Overall it was a "weak'' result for Otago, he said.
"The Queenstown-Lakes district in particular is experiencing stellar growth in tourism, lots of new building work and strong rises in house prices and job creation,'' Mr Norman said.
While Dunedin was "doing OK'', Mr Norman said other parts of the region were not seeing the same gains.
