The nature of the country's economic slowdown was evolving and that was affecting the regional make-up of the economy.
Smaller, more export-focused regions were still outperforming the "big smokes'' in Auckland and Canterbury, but the margin had narrowed, Westpac's latest Regional Roundup report - which summarises the economic outlook by region - said.
Over the year ahead, the bank expected that margin to narrow further. Export log prices had tumbled, and some forestry crews, particularly those on the East Coast of the North Island and Northland, have already found themselves out of work.
Sentiment in dairy-heavy regions such as the Waikato, Taranaki, Manawatu, and Southland, remained fragile amid ongoing concerns about the impact of Government policy.
International tourism had also slowed, particularly affecting the South Island's economy, Mr Stephens said.
Fortunately, there were exceptions - horticulture, sheep and beef were "still going great guns'' which was a help to the otherwise deteriorating export conditions for regions such as Otago, Hawke's Bay and Gisborne, he said.
Economic activity in Otago seemed as if it had "come off the boil'', the report said, despite higher prices for meat, pip and stone fruit.
Uncertainties about how Government policy might affect dairying would have increased anxiety levels among farmers.
The construction sector was being kept busy by ongoing commercial projects in Dunedin, including those at the University of Otago, while the number of building consents issued seemed to have stabilised at reasonably high levels after some volatility earlier in the year.
Tourism activity had been slowing and spending by international and domestic visitors to the region had also slowed markedly.
The region's labour market was also showing signs of softening and weaker demand for labour was likely to reflect a drop in manufacturing activity and a ``stuttering'' performance from the services sector.
House-price inflation had been slowing for some time while sales volumes had generally trended lower.
Otago was likely to feel the effects of a slowing global economy in coming months and that would be seen in weaker tourism activity, sluggish manufacturing and softer prices for key exports.
However, as the coming year unfolded, the bank expected economic activity to lift as lower interest rates and increased government expenditure encouraged more household spending.
Ongoing global uncertainties and weakening economic growth in key source markets were likely to dampen tourism to the region.
The resulting slowdown in tourist spending was likely to be more significant in the tourism-dependent region than in other regions and the Central Lakes district was likely to be hardest hit.
Manufacturing activity was likely to remain weak in the face of strong competition in export markets, as well as disruptions stemming from the deepening trade dispute between the United States and China.
