In fact, Southland was the only region in New Zealand not to drop in confidence on the back of record high meat and dairy prices.
Westpac yesterday released its latest McDermott Miller Regional Economic Confidence Index — written by the bank’s senior economist, Nathan Penny, — for the March quarter, which found regional economic confidence in New Zealand had plunged in the past three months as households were being hit by the "one-two punch" of the Omicron outbreak and cost-of-living increases.
Otago registered the largest drop in confidence, down 27 points to a net confidence reading of -19 points, as many domestic tourists shelved plans to visit the region over the quarter, Mr Penny said.
However, the opening of the borders to tourists and the general relaxing of the Covid-19 restrictions would give the region a "massive shot in the arm" over the coming quarter.
"Indeed, the region’s fortunes are likely to remain heavily dependent on Covid gyrations over the year ahead and beyond," he said.
It was a different story in Southland with its confidence level remaining the same over the quarter at a reading of +14 points.
The region topped the economic confidence charts for the second quarter in a row, largely due to the "very healthy" agriculture sector.
Mr Penny said dairy and meat sectors were "firing on all cylinders".
Looking ahead with the primary sector outlook still strong, Mr Penny expected confidence to remain firm.
"On balance, confidence may even get a bump higher as Omicron cases peak and Covid restrictions ease," he said.
Canterbury’s economic prospects also took a hit over the March quarter, with confidence sliding 13 points to -6.
Mr Penny said, with no major developments in the region’s key industries, the slide was down to Omicron and cost of living increases.
That aside, Canterbury’s key industries continued to fire.
Its housing market remained resilient, with prices continuing to rise over recent months.
That meant economic confidence was likely to recover as cases began to fall and restrictions began to ease over coming months.
"Although like other regions, the rising cost of living may temper the magnitude of the improvement," Mr Penny
said.
In other parts of the country, Taranaki/Manawatu-Whanganui took a 25-point drop in confidence largely entirely down to the Omicron outbreak and cost of living increases.
However, the region’s energy and agriculture sectors would help rebound some confidence in the coming quarter, Mr Penny said.
