Photo: RNZ
New Zealanders were told to "survive til '25" for the economy to pick up - but now one major bank economist says it's probably going to be 2026 before any real improvement happens.
Kiwibank's latest Annual Regional Note shows small improvements across the country, but weak scores overall.
The national average score has lifted from three out of 10 to four.
Southland and Otago top the table at five. Otago was boosted by a recovery in international tourism and improvement in employment.
Northland, Taranaki and Gisborne went backwards. Taranaki had the biggest fall in employment of anywhere in the country, at 8 percent. Northland reported a double-digit drop in building consents.
Retail sales remain below their average levels over the past decade in most regions, as weak household confidence weighs on consumption.
Kiwibank said Wellington recorded the steepest annual decline at a -3.3 percent, while regions like Waikato, Northland and the Bay of Plenty experienced a slight improvement on last year.
'Wellington is just more pessimistic'
Jarrod Kerr Photo: Supplied / Gino Demeer
Wellington's score improved from a two out of 10 to a three out of 10 while Auckland lifted from a three to four.
"Wellington is just more pessimistic," Kiwibank chief economist Jarrod Kerr said. "It's gone through a lot in recent years. You can see it in their activity, you can see it in the housing market. You can see it in the economy, the city has been brought to its knees and it's been struggling to shake the pessimistic vibe."
He said both Auckland and Wellington were well below average. "If you look across the regions, some of them have gone backwards and others are improving but it's not good.
"When you look at the South Island things are better, people are definitely more optimistic in the South Island but even then the top scoring regions get a five out of 10."
He said the report helped solidify the view that rate cuts to date had not been enough to turn around the economy.
"We're really crawling out of this recession rather than regaining our footing and looking to grow from here. We're still struggling across the entire country."
He said Kiwibank customers last year had talked about needing to hold on until this year.
"We are halfway through the year and, yes, things are better but only by a little bit."
Worse off than Australia
New Zealand was worse off than Australia, he said.
"Their economy is much stronger than ours but in their terms it's soft… where everything washes out is the labour market and, you know, the unemployment rate tells you a lot. Our unemployment rate is over 5 percent and theirs is pretty close to 4 percent."
Part of the reason was the more aggressive interest rate hikes from the Reserve Bank, he said. "We were much more aggressive in our rate hikes than in Australia. We were much more aggressive on inflation than across the Tasman.
"I think both the RBA and RBNZ made mistakes as I think every central bank did through the Covid period, we overstimulated in hindsight but at the time it was the right thing to do. And then we had to deal with the inflation problem."
He said the Reserve Bank had kept the official cash rate at 5.5 percent for too long as it worked to tackle inflation.
"We had a really bad recession last year, which the Reserve Bank openly orchestrated, they said 'look, we need a recession to get inflation back down'. The Australians didn't orchestrate a recession, they didn't slam the economy into the floor."
Kerr said recovery was still coming but he had hoped it would have started more obviously by now.
"We're hoping it takes off in the second half of this year as more and more people refix on to lower rates. Then it's more of a 2026 story now."
