Boom times . . . for now
A construction boom, tourismfuelled spending and more trucks on the road – all indicators of a bullish Waikato economy.
Data crunched by economics consultancy Infometrics show Waikato’s economy expanded by 3.2 per cent in 2019, a faster clip than the national average of 2.3 per cent.
But the good news comes with a warning as the prospect of a drought and growing fallout from the coronavirus outbreak looms large.
Infometrics senior economist Brad Olsen said Waikato led regional economic growth over the past 12 months to December. The positive showing builds on Waikato’s strong growth figures in 2018. Rising house prices, buoyant construction activity and increasing traffic volumes across Waikato point to a healthy regional economy, Olsen said.
‘‘If households are driving about it shows they’ve still got confidence. When they don’t have confidence, generally speaking, they stick a bit more at home. If we see a lot of traffic flows coming through, that means there is freight on the road. If there is freight on the road, that means we’re making products and moving products,’’ Olsen said.
However, a potential drought, as well as disrupted trade with China caused by the coronavirus outbreak, could hurt the region, especially Waikato’s prized dairy sector.
‘‘When a drought comes, generally speaking, the milk price increases because supply is hampered. But there’s a risk that this COVID-19 outbreak supersedes that, and overturns it, so there is a possibility for the milk price to go lower,’’ Olsen said.
Waikato Federated Farmers president Andrew McGiven said the mood among rural communities has improved over the past six months but a drought would test farmers’ resilience. Fallout from the coronavirus has already started to impact some farmers, he said.
‘‘Farmers trying to destock and send stock to the works are facing anywhere between a seven-day to three-week wait. China still needs food but the coronavirus has just slowed everything right down and that’s why everything is clogged up,’’ McGiven said.
Farmers are also keeping a nervous watch on new water legislation and the potential for increased compliance costs, he said. The Waipa¯ district was a standout performer in 2019, recording the strongest growth in tourist spending. Tourism was worth $194m to the Waipa economy in 2019, up from $170m in 2018.
Regular big fixtures and popular sporting events attract people to the district, benefiting motel and hotel operators, Waipa¯ Mayor Jim Mylchreest said.
Another indicator of Waipa¯ ’s strong economy is the
construction activity around Hautapu, north of Cambridge, and near Hamilton Airport.
‘‘As a council, we also see the growth reflected in our building consent figures,’’ Mylchreest said.
Waikato Chamber of Commerce executive director Don Good said businesses are mindful of the prospects of a drought and the implications from the coronavirus outbreak. The upcoming general election has also created a degree of political uncertainty which could cause business owners to be more cautious when it comes to decisions around long-term investment, Good said.
Labour list MP Jamie Strange said the eyes of the country were on Waikato as new businesses relocated to the region, bringing with them new jobs. Waikato and Hamilton had also benefited from central government investment in infrastructure such as the Waikato
Expressway.
‘‘Work on the expressway started in the early 2000s under Labour, heading south down through Po¯ keno. The National Government has invested in it and this current Government has invested about $1 billion into it as well,’’ Strange said.
Good said the Waikato Expressway was a ‘‘superb piece of infrastructure’’ but needed to be followed up with investment in the arterial routes between Hamilton and Tauranga.
‘‘We need to prioritise investment in water infrastructure and arterial routes such as roading and rail. Investing in arterial routes between major cities is crucial, hence our interest in the link between Hamilton to Tauranga,’’ Good said.
Olsen said Waikato’s and other regions’ economies were in a solid condition at the end of 2019 but there was a growing risk growth could ‘‘soften’’.