Jarrod Kerr: Kiwibank chief economist on the South Island's economy recovering quicker than the North's

The South Island seems to be pulling ahead of the North as New Zealand crawls out of the recession. 

Kiwibank’s latest report reveals economic activity is picking up across most of the country - but recovery remains fragile. 

It indicates booms in agriculture and tourism have aided recovery in places like Otago and Southland.

Kiwibank chief economist Jarrod Kerr says the tide is turning for the economy, but the nature of last year's recession means recovery will take longer than expected.

"It's not fast enough for me - the way we're recovering, I think we need more stimulus, I think we need more policy support."

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Sunday Session podcast with Francesca Rudkin
from News Talks EDB.

Speaker 2 (00:12):
So the regional economic divide appears to be widening, with
the South Island pulling ahead of the North. Keew Wei
Bank has released its annual Regional Note showing most showing
the most economic activity of the regions across the country
has lifted. However, the South Island continues to outperform the North,
with the Tigo and Southland leading the way as the
country's top performing regions. Kee We Bank chief economist Stared

(00:36):
cur is with me. Now, good morning, Jarret, good morning.
So that's good news for the South Island. What are
we seeing down there? Why is it pulling ahead?

Speaker 3 (00:44):
Look, the South Island's doing well, not only the farming,
but the tourism industry is picking up. We're getting back
to the sorts of levels we saw prior to COVID,
so that's really helping Otago for example. And there's a
bit of a building boom going on in Southland, very
strong down there.

Speaker 2 (01:05):
What about the rest of the South Island.

Speaker 3 (01:08):
So the rest of the South Island is doing okay,
you know, they're recording sort of four five out of ten,
which is not great, but it's much better than what
we were last year.

Speaker 2 (01:21):
So that momentum in a tago in Southland. Do you
expect that to continue?

Speaker 1 (01:25):
Yeah? I do.

Speaker 3 (01:26):
I do. I think farmers will continue to receive high
prices for their meat and dairy in particular, and I
do think the international tourist will continue to improve. You know,
I think tourism's got a bit more upside to it,
and then I think the rest of the economy will
slowly recover into next year.

Speaker 2 (01:48):
Jared, what's going on in Taranaki, Northland and Gisbon they're
going backwards? Is that a surprise?

Speaker 3 (01:53):
Yeah, good question. We looked at that and it was
a surprise, particularly Taranaki, where we see, you know, a
lot of their economies made up of farming and you know,
the supposed to be doing really well, but employment in
the region was down eight percent over the years. So
it just shows you that even though some parts of

(02:14):
the economy are doing well, other parts aren't, and you know,
they're really struggling.

Speaker 2 (02:20):
Okay, So if we take a look at things on
a you know, on a whole most regions have lifted.
Is the tide turning.

Speaker 3 (02:31):
The tide is definitely turning, and that's because the Reserve
Bank has been cutting into trates and that's slowly feeding
through the economy. So the tide's turning. It's just the
speed at which we're recovering from last year's recession, which
was pretty deep, and it's not fast enough for me.
The way we're recovering. I think we need more stimulus.

(02:54):
I think we need more policy support.

Speaker 2 (02:57):
What is the national score at the moment?

Speaker 3 (03:00):
National score is about three and a half four, which
you know, well below average. To get that up, yeah, sorry,
out of ten, we need to get that up around
six seven, So you know, that's better than the twos
and threes that we were recording last year. But you know,
we're not shooting the lights out. We're sort of crawling
out of this recovery.

Speaker 2 (03:20):
Because we were all sort of told to hold on,
you know, to twenty twenty five, survive to twenty five,
but it's now looking like it's really going to be
twenty twenty six before we see any significant improvement, would
that be right?

Speaker 3 (03:31):
Yeah, unfortunately that is the case. So you're right, we're
all saying, you know, it's just survive till twenty five.
But you know, here we are halfway through twenty five
and we're just not seeing the recovery that we had anticipated.
So it is becoming a twenty twenty six story. Unfortunately,
we are having to grind for that much longer. But

(03:54):
I do see light at the end of the tunnel,
and we are optimistic that things will improve next year.

Speaker 2 (04:00):
How are we looking against the likes of Australia.

Speaker 3 (04:03):
You know what we're lagging behind. Australia was, you know,
a lot less heavy handed during the inflation period we
had a couple of years ago, whereas our central bank
was very heavy handed and openly orchestrated a recession to
get inflation down. The Aussies let things run, and you know,

(04:26):
they're sitting there with an unemployment rate of a little
over four percent, whereas our unemployment rates over five percent.
So they have a tighter labor market, they have a
better running economy, and that's why we're losing Kiwi across
the across the ditch.

Speaker 2 (04:40):
Thanks so much, Jared, I think we'll all hold on
to you a little bit of light at the end
of the tunnel. Thank you so much. That was KIWI
Bank Chief economist Jared Kerr.

Speaker 1 (04:49):
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