Horticulture drives Nelson region’s rising GDP

The Nelson region’s economy has been punching above its weight.

The size of Tasman and Nelson’s economy rose by 7.8 per cent in the year to March 2014, according to latest figures from Statistics New Zealand. That is above the 6.7 per cent growth nationwide for the same period.

The increase in the region’s gross domestic product (GDP) was thanks to the agricultural sector, mainly horticulture, and manufacturing – with the region having the largest share of seafood processing..

In the five years from 2009, the Nelson and Tasman economy grew by 25.4 per cent, above the national rise of 22.4 per cent. The region contributed 1.8 per cent of New Zealand’s GDP, at $42,695 per person.

Canterbury hit a historic economic high, with GDP growth of 10.6 per cent for the year to March 2014.

Canterbury Employers’ Chamber of Commerce chief executive Peter Townsend said the growth of more than 10 per cent was unprecedented for Christchurch, but not unexpected.

‘‘I’ve never seen numbers like that before,’’ he said. ‘‘I’m not surprised to see those figures, however – we know how busy we are, we’re now spending $100 million a week every week in Christchurch, and all of the economic indicators say we’re in a very vibrant situation.’’

He said the economy would stay strong, but growth would soon begin to plateau at its current high level.

The common factor in the country’s fastest-growing regions was growth in the dairy industry, and in Canterbury a much larger construction sector boosted by the rebuild.

ASB chief economist Nick Tuffley said: ‘‘What we did see over that year was the rebound from drought, and that really big increase in dairy prices, so regions with fairly high dairy exposure saw a big lift in the value of output, and you can see Canterbury, Southland, Waikato and Taranaki all have that in common’’

Even without the agriculture sector, however, the country had had a strong economic year, Tuffley said. ‘‘If we overlook dairy we still had a pretty reasonable year of growth – particularly in Canterbury you can really see the impact of the rebuild coming through, and about a third of growth in Canterbury came through in the added value of construction.’’

Tuffley said about 4 per cent of the national rise was because of price increases, especially in the dairy sector.

‘‘We have to remember that at a regional level what’s being measured is dollar value of GDP rather than the volume. So nationwide what we saw over that year was volume growth of 2.5 per cent, which means price accounted for over 4 per cent of the overall lift.’’

With dairy prices dropping significantly in the latter half of 2014, Tuffley said the next year’s results could see a slowdown in that overall dollar-value growth.

‘‘From a real economy point of view the momentum [for the last year] has been a bit stronger, but the price aspect is weaker due to that fall-back in dairy prices.’’

Wellington and Auckland were among the slower-growing regions for the year, with Auckland at 5.1 per cent growth and Wellington sitting at 4.4 per cent in the year to March 2014. Their economies are more service industry-focused. New Zealand’s total GDP was $229.7 billion, with the North Island contributing 76.6 per cent compared with 23.4 per cent from the South Island. Auckland was still making up a lion’s share, contributing 35.3 per cent of the country’s total GDP.

Wellington and Canterbury were neck and neck, contributing 13.2 per cent and 13.1 per cent respectively.