Latest data from the Otago Chamber of Commerce business quarterly report show Otago business expectations both nationally and their own expectations continue to decline, chamber chief executive Dougal McGowan said.
''Dunedin business are starting to show some signs of change in sentiment in the latest chamber survey.
''As per other surveys, they're citing a change in government and their worries about the final detail of [new government] policies,'' he said.
The quarter to December survey was the third consecutive quarter where Otago Southland expectations had shown an overall decline.
Expectations of the Otago Southland respondents include fewer businesses expecting an improvement, more expecting business to stay the same, an increase of those whose profitability had declined and more than double the number of those expecting a deteriorating outlook during the next six months.
Otago has been prominent in several surveys during the past fortnight, with both its manufacturing and service sectors in the BNZ-BusinessNZ index' streets ahead of other regions, while respondents to the Westpac McDermott Miller Regional Economic Confidence Index showed a huge lift in Otago households expecting a regional economic improvement this year.
However, Mr McGowan said while there was growth and buoyancy in several sectors, drought and high temperatures, Southland's aquaculture losses from the closure of Stewart Island oyster farms and widespread skill shortages were behind much of the pessimism.
''Recent surveys have had Otago as still relatively positive and upbeat, but there are signs this could be changing.
''It's important to differentiate between Dunedin and the regions such as Central Otago and the Central Lakes District,'' he said of the different factors at play in each economy.
''Dunedin's looking forward to the return of students, continued buoyancy for the food and beverage, hospitality and accommodation sectors provided by tourism and events coming to the city,'' he said.
There was also optimism from the range of concerts, sporting events and other significant annual activities coming up, such as the Masters games, Trenz conference, university and polytechnic graduations and students' Orientation Week.
''People are still positively looking towards further building and possible infrastructure opportunities which are regularly referenced around the city, such as the hospital rebuild, building projects and harbour redevelopment,'' he said.
While Dunedin's major infrastructure work is either already under way or planned, or like the new hospital, just gaining some traction, Queenstown and Central Otago's overburdened infrastructures are being stretched to breaking point.
Mr McGowan said in Central Otago there were ''huge loads'' on infrastructure capabilities at present, but several projects were under way and there were plans for more in the future.
''The growth continues throughout the region,'' he said.
The primary sector and tourism was benefiting from better than usual conditions and stone and pip fruit crops looked to be positive, although continued high temperatures might yet cause some issues, he said.
''Accommodation, labour and skilled workers still a major issue causing capacity constraints,'' Mr McGowan said, a description also reflected in the BNZ-BusinessNZ services index earlier this week.
Southland also had similar myriad issues to contend with. Mr McGowan said labour and skilled workers shortages was still a major issue causing capacity constraints for primary sector manufacturers and producers.
''As recently noted by Westpac, Southland sentiment seems to have changed the most,'' he said.
Aside from issues around the aquaculture losses recently, the new Government's policy on its Free Fees programme had potential to effect student numbers at SIT, Mr McGowan said.
''Primary sector prices in lamb and beef were good before Christmas, but the long-term outlook is lower pricing,'' he said.
He warned that the record dry conditions were starting to have an effect. Feed was having to be bought for stock, while spot electricity pricing meant irrigation costs for some farmers were increasing.
''Great spring conditions and then recent drought meant more lambs were sent for processing, which has seen higher than usual export numbers,'' Mr McGowan said.
