A mixed bag for regional growth under COVID-19

The latest regional GDP figures (for the year to March 2021) released by Stats NZ today reflect the full initial impact of COVID-19 on regional economies in New Zealand.

While economic growth was better than expected at the beginning of the pandemic, regions were impacted very differently by the restrictions put in place to control the spread of the virus.

Those areas like Marlborough (+3.7%) which are exposed to the primary sector have been some of the most resilient, particularly areas with limited exposure to tourism. Nelson/Tasman (+3.1%) also saw solid GDP growth due to their large health services sector which was less affected by COVID-19 restrictions. When compared with pre-pandemic levels, economic activity has been generally strong in the central North Island.

By contrast, those areas that relied on international tourism pre-pandemic struggled. Otago (-2.2%) which is heavily dependent on tourism related industries was hit hard in terms of declines in economic activity. Taranaki, whose main industry is oil and gas production also contracted 5.8%. This was due to lower global prices for energy as COVID restrictions dramatically reduced the movement of goods and people.

As a gateway for international tourists, Auckland was also impacted by the restrictions. Auckland suffered low first-quarter 2021 GDP growth rate (1.5%) due to border closures and spending 20 days of the quarter under alert level 2 and 3 restrictions.

Wellington’s large public sector meant it was insulated from the effects of much of the COVID restrictions. Employment continued and most workers could switch easily to working from home. As a result it had the highest GDP per capital for the year to March 2021.

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