Southland's economy has hit rock bottom and is slightly starting to recover — but the Christmas and summer will still be tough, an economist says.
Economic consultancy company Infometrics’ "Quarterly Economic Monitor" released last week showed despite falling interest rates, business conditions were difficult, with rising unemployment limiting spending and investment by households and businesses alike.
It stated things were tough, especially for rural areas, as they were feeling the pinch the hardest.
Infometrics principal economist Nick Brunsdon said Southland’s economy was pretty much following the national trend, which was "flat".
"If anything, it has been a little bit down. We estimate that Southland’s economy contracted by about 0.3% over the year to September, but there was a 0.1% gain in the September quarter.
"So essentially what that says is there was a little bit of a decline, but it looks like you’ve hit the bottom, that you’re at the bottom of the decline, and it’s just ever so slightly starting to recover off that bottom."
The employment indicator, which was based on Stats NZ data, showed Southland’s employment rose 0.2% in the year to September, he said.
"So pretty minimal, essentially, but that’s what we would expect, given that we’ve got a challenged national economy.
"There’s not a lot of money to go around, and so that affects businesses as well, and their willingness to hire people."
Mr Brunsdon believed things could look a bit more positive for the next six to nine months as interest rates started to come down and this would roll over into lower mortgage rates, freeing up a bit more money in people’s wallets.
He believed then people would be more keen to spend more, especially in the hospitality industry which had been "borne the brunt of people closing their wallets".
While things could be looking a bit better, he said the Christmas and summer period would still be tough.
"It will probably be the same as what we’ve had through the year, so I guess slightly down on last year’s Christmas.
"Another one is tourism. We’ve had a really strong kind of wave of support as international tourists have returned to the country, but that’s pretty well run out — both nationally and locally.
"We just started to see in the September quarter a little bit of a fall in guest nights, about 8% fall in guest nights at commercial motels in Southland ... and that’s reflecting that international visitors aren’t growing at the same rate and domestic tourists aren’t travelling quite so much as well."
He said in the big picture while most people had not lost their jobs, they were concerned and their financial behaviour was a bit more reserved.
"They are trying to squirrel a little bit more money away for a rainy day, which is really sensible on a household level."
