The latest BERL (Business & Economic Research Ltd) Otago regional economic profile, including a detailed section on Central Otago, confirms what many have felt – that after a long sustained period of growth, the economy of Central Otago was in recession last year.
However, within the overall downturn there are some pockets of good news that give hope that the local economy will weather this storm and emerge strongly.
According to BERL; in the year ended March 2010, the Central Otago economy contracted by 1.3%. This compares to a national contraction of 0.3% and an overall Otago economy which grew (on the back of Queenstown tourism and North Otago mining and dairy) by 0.4%. Employment numbers declined in the district by 2.9%. However, the resident population continued to grow (by 1.4%) and labour productivity increased by 1.5%.
Central Otago avoided the recession when it was at its deepest in 2009, but has suffered a delayed reaction. For the previous 12 months (2008 and 2009) the Central Otago economy had grown by 6% while the national economy shrank by 1.1% in the same period.
Breaking down this performance, several sectors of the economy took a big hit last year; none more than the construction industry which contracted by 10.6% and shed 9.7% of the people previously employed. Manufacturing and Social Services contracted by 6.4% and 4.3% respectively.
On the upside, retail and distribution (which are lumped together) and business services both grew by almost 2% while recreation services grew by 8.5%.
The tourism sector, which incorporates components of business services as well as retail and distribution, grew by almost 10% in the year ended March.
Taking a longer term view, the Central Otago economy has performed exceptionally over the last 10 years (2000 – 2010). Resident population growth increased by 2% per annum (NZ: 1.2%), GDP increased by 3.7% per annum (NZ: 2.3%), employment increased by 4.4% per annum (NZ: 1.9%) and the number of businesses increased by 3.9% per annum (NZ: 2.2%). Even allowing for the decline our economy suffered this last year, Central Otago has been one of the best performing districts in New Zealand over the first decade of the century.
Mayor Tony Lepper said, “The latest BERL report needs to be read in conjunction with the stellar performance of the Central Otago economy for the past decade. There has been a significant contraction in the economy but it has come on the back of a period of sustained growth. Hopefully this correction is behind us and we look forward to a period of stabilisation and further growth based on our more traditional contributors, in the primary sector.”
The regional economic profile was commission by Otago Forward, the regional economic development agency for Otago; Central Otago District Council contributed $4,500 towards the cost.
Copies of the report can be obtained by contacting Business Development at the Council.